Hyve — FY2019 Earnings Presentation
54 slides from Hyve's earnings presentation, Dec 3, 2019
Slide 1: Preliminary Results, Year ended 30 September 2019
Hyve Group plc Preliminary Results Year ended 30 September 2019 3 December 2019
Slide 2: Agenda
Agenda › Highlights Mark Shashoua › Preliminary results Andrew Beach › Transformation delivered Mark Shashoua › TAG financials Andrew Beach Mark Shashoua › Q&A & Andrew Beach Preliminary results: year ended 30 September 2019 / 2
Slide 3: Highlights
Highlights FY19 › 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
Slide 4: Preliminary results
Preliminary results Andrew Beach, CFO Preliminary results: year ended 30 September 2019 / 4
Slide 5: FY19 highlights
Preliminary results FY19 highlights 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 one-off £4.2m £7.0m TAG costs Within guidance ongoing £8.0m £7.5m Net debt £111.7m £82.7m <2x EBITDA, within guidance He
Slide 6: Revenue bridge
Preliminary results Revenue bridge (£5.3m) (£2.3m) £10.7m £47.9m (£6.0m) £220.7m £m £m £m £175.7m TRY (1.4) Russia 6.6 Ascential/ 62.5 Mining Indaba RUB (0.8) AOW 1.2 ITE Expo (Russia)/ INR (0.5) Breakbulk 0.6 (14.6) Central Asia/Other Other 0.4 Other 2.3 FY18 Net Biennial Acquisitions Launches & FX
Slide 7: Top TAG events drove higher revenue growth
Preliminary results Top 10 TAG events drove higher revenue growth 25% Top 10 TAG Rest of portfolio LFL growth LFL growth Average yield Average yield Top 10 TAG TOTAL Top 10 TAG TOTAL 13% 7% £309/sqm1 £266/sqm1 1 Total group revenue / total group sqm (excluding AOW and Mining Indaba conferences) Prel
Slide 8: Headline PBT bridge
Preliminary results Headline PBT bridge (£0.5m) (£4.2m) £4.7m £15.4m (£0.4m) £50.4m £m £m £35.4m Revenue (2.3) Ascential / Translational 17.6 Mining Indaba Cost Translational 1.5 ITE Expo (Russia) / Translational (0.8) Central Asia / (2.2) Other Transactional (B/S) (3.4) FY18 Net Biennial Acquisitio
Slide 9: Strong revenue visibility for FY20
Preliminary results Strong revenue visibility for FY20 LFL increase of 4% £152m revenue booked 1 for FY20 Represents 66% of consensus 1 Booked at 29 November 2019 at actual event rates for past events and at FX rates at 28 November 2019 for future events Preliminary results: year ended 30 September
Slide 10: Financial summary
Preliminary results Financial summary Strong LFL revenue growth; Step change Top 10 TAG events towards sustainable double-digit operating margins growth Profit growth significantly above Excellent FY20 revenue growth revenue visibility Preliminary results: year ended 30 September 2019 / 10
Slide 11: Transformation delivered
Transformation delivered Mark Shashoua, CEO Preliminary results: year ended 30 September 2019 / 11
Slide 12: Historical context prior to TAG programme
Transformation delivered Historical context prior to TAG programme Revenue decline and unsustainable margins Changing customer expectations -11% CAGR › Exhibitors demand Return on Investment £192m £175m £136m £134m › Visitors demand Return on Time › Greater emphasis on learning and networking within
Slide 13: Our vision
Transformation delivered Our vision “To create the world’s leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers.” Preliminary results: year ended 30 September 2019 / 13
Slide 14: Transformation and Growth programme
Transformation delivered Transformation and Growth programme TAG Programme Create a Manage Product-led Scalable Platform the Portfolio Acquisitions Underpinned by a performance-led culture Preliminary results: year ended 30 September 2019 / 14
Slide 15: Scalable operating model created
Transformation delivered Scalable operating model created Created best practice functions & teams Invested in show operations Built capability & talent Drove a performance culture Built fit-for-purpose IT infrastructure & systems Preliminary results: year ended 30 September 2019 / 15
Slide 16: Breakbulk Europe
Transformation delivered Breakbulk Europe TAG improvements since FY16 › 37% more space sold FY16 › Visitor NPS improved from +8 to +28 › Revenue per exhibitor up 55% › Overall revenue up 67% Preliminary results: year ended 30 September 2019 / 16 FY19
Slide 17: Africa Oil Week
Transformation delivered FY16* Africa Oil Week TAG improvements since FY17* › Delegate NPS (FY18-19)** improved from +18 to +32 FY20 › Paid delegates (FY17-19) up 33% › Overall revenue (FY17-19) up 40% *Hyve took full ownership of AOW in May 2017, i.e. FY17 Preliminary results: year ended 30 Septemb
Slide 18: Strengthened KPIs from our Top 10 TAG events
Transformation delivered Strengthened KPIs from our Top 10 TAG events New customer service New high quality Systematic lead team helps exhibitors content attracts generation drives maximise success key visitors growth Exhibitor NPS (FY16-19) Visitor NPS (FY16-19) New business (FY18-19) increased fro
Slide 19: Quality of portfolio improved since launch of TAG
Transformation delivered Quality of portfolio improved since launch of TAG Manage the portfolio May 2017 Sep 2019 No. of events 269 130 52% 89 Revenue £134m2 £221m3 64% Revenue per event £0.5m £1.7m 240% Product-led acquisitions 269 65 events 15 130 events May 2017 1 Closed Divested Acquired Sep 201
Slide 20: A more balanced geographical footprint
Transformation delivered A more balanced geographical footprint FY17 Revenue FY19 Revenue Global Brands 12% Global UK 22% 23% Brands 47% 16% Asia Russia 10% Asia 14% Russia 28% 9% Central Central 11% Asia 8% Asia ESE ESE Preliminary results: year ended 30 September 2019 / 20
Slide 21: Integration of acquisitions is complete
Transformation delivered Integration of acquisitions is complete Reinvesting half of the synergies to drive future growth Re-edit events to improve customer experience Focus on key accounts Integration Grow international events to scale Launch hosted buyers programme Investigate new markets over the
Slide 22: Targeted trajectory for recent acquisitions
Transformation delivered Targeted trajectory for recent acquisitions Investment plans 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 Gr
Slide 23: Returned the business to sustainable growth
Transformation delivered Returned the business to sustainable growth Revenue and headline operating profit TAG -11% +18% £221m CAGR CAGR £192m £175m £176m £153m £136m £134m 31% 35% 36% 29% 23% 22% 25% FY13 FY14 FY15 FY16 FY17 FY18 FY19 Headline operating profit Costs Preliminary results: year ended
Slide 24: TAG financials
TAG financials Andrew Beach Preliminary results: year ended 30 September 2019 / 24
Slide 25: One-off TAG programme investment
TAG financials One-off TAG programme investment Plan FY17 £6-7m FY18 £8-10m FY19 £4-6m £20m FY20 Actual FY17 £5.0m FY18 £7.0m FY19 £4.2m forecast £3.8m One-off Costs Mix Investment by Transformation Lever Best Practice Infrastructure & Invest in Show Performance Capability Capex Opex - Exceptional S
Slide 26: Ahead of plan on all TAG investment targets
TAG financials Ahead of plan on all TAG investment targets Target Original plan Revised Status Positive ROI FY20 FY19 Delivered early ROI > WACC FY21 FY20 Ahead Cash payback FY21 FY21 Ahead1 1 Original plan delivery expected H2 FY21; revised to H1 FY21 Preliminary results: year ended 30 September 20
Slide 27: Industry-leading growth after years of decline
TAG financials Industry-leading growth after years of decline £240m £221m £220m £200m £192m £175m £176m Revenue £180m £160m £153m £140m £136m £134m £120m FY13 FY14 FY15 FY16 FY17 FY18 FY19 LFL growth / (decline) -10% -12% -8% +5% +11% +7% Preliminary results: year ended 30 September 2019 / 27
Slide 28: Sustainable margins
TAG financials Sustainable margins 40% TAG investment period 36% 35% 35% City consensus 31% 30% 29% Reinvestment Operating 27% profit 26% margin 25% 25% 23% 22% 20% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Preliminary results: year ended 30 September 2019 / 28
Slide 29: Net debt within guidance
TAG financials Net debt within guidance 2.5 Average cash conversion TAG corridor 1.5x – 2.0x FY17-19 > 100% 2.0 2.0 City consensus 1.9 1.5 Net debt : 1.4 1.4 EBITDA 1.3 1.0 1.0 0.5 FY16 FY17 FY18 FY19 FY20 FY21 Preliminary results: year ended 30 September 2019 / 29
Slide 30: Operational delivery of TAG
TAG financials Operational delivery of TAG FY19 FY16 Variance 1 Average yield (per SQM) – TAG £252 £187 +35% 1 Yield Average yield (per SQM) – Total £225 £183 +23% Yield growth versus inflation +3% -13% +16pp Revenue Onsite rebook 47% 0% >100% visibility Forward bookings 62% 2 53% 3 +9pp Sales Reven
Slide 31: On track to deliver our 3-year guidance
TAG financials On track to deliver our 3-year guidance FY18 FY19 FY20 Revenue growth Margin growth EPS growth Preliminary results: year ended 30 September 2019 / 31
Slide 32: Summary & Outlook
Summary & Outlook Mark Shashoua Preliminary results: year ended 30 September 2019 / 32
Slide 33: Summary & Outlook
Summary & Outlook Will continue Returned the TAG programme to look for business to puts us in a strong product-led sustainable position in current acquisitions and growth environment further optimise Focus is on the portfolio Expect margins £147m to 1 continuous £143m1 (of £230.7m) continue to (of g
Slide 34: Q&A
Q&A Mark Shashoua & Andrew Beach Preliminary results: year ended 30 September 2019 / 34
Slide 35: Appendices
Appendices Preliminary Results Year ended 30 September 2019 Preliminary results: year ended 30 September 2019 / 35
Slide 36: "Create a scalable platform" targets ahead of plan
Appendices “Create a scalable platform” targets ahead of plan 1 Plan Within 3 years (FY20) In-year net operating profit after tax (“NOPAT”) Positive ROI Update Within 2 years (FY19) Positive ROI in FY 2019 2 Plan Within 4 years (FY21) ROI > WACC1 Update Within 3 years (FY20) 3 Plan Within 4 years (F
Slide 37: Consolidated income statement
Appendices Consolidated income statement 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 Fi
Slide 38: Divisional analysis
Appendices Divisional analysis FY19 FY18 Revenue HPBT Revenue HPBT £m £m £m £m Global Brands 49.7 20.3 11.5 2.1 › Ascential Events and Mining Indaba acquisitions › Impact of biennial Asia 23.2 9.4 25.7 10.2 › Profit supported by strong growth from Sinostar joint venture › Timing differences Central
Slide 39: Revenue by sector
Appendices Revenue by sector Build & Interiors Retail FY19 FY17 Food & Packaging 6% 4% 4% 17% 6% Education Technology 5% 28% Fashion 5% 8% Manufacturing Industrial Technology 6% Transport & Logistics 15% 10% 7% Connect 3% Energy 7% 7% 16% Travel & Tourism 14% 8% 9% 8% 7% Advanced Technologies Beauty
Slide 40: Performance analysis
Appendices Performance analysis Headline Profit Metres Revenue Before Tax 000s £m £m Results from events 766 175.7 35.4 Biennial (26) (4.7) (1.7) Timing (12) (4.3) (1.1) FY18 Non-recurring (33) (5.3) (0.5) Disposals (64) (14.6) (2.2) Recurring events b 631 146.8 29.9 Acquisitions 139 62.5 17.6 Launc
Slide 41: Top 10 events by revenue
Appendices Top 10 events by revenue September 2019 May 2017 (launch of TAG) Event name Region Event name Region Spring Fair UK MosBuild Russia MosBuild Russia WorldFood Moscow Russia BETT (London) Global Brands 43% MITT Russia 35% WorldFood Moscow Russia Aquatherm Moscow Russia Autumn Fair UK Turkey
Slide 42: Headline diluted EPS bridge
Appendices Headline diluted EPS bridge 0.7p 0.1p (2.3p) 1.5p 4.9p 4.9p FY18 Increase in profits Increase in Decrease in Change in no. of FY19 due to acquisitions underlying profits NCI profits shares in issue Preliminary results: year ended 30 September 2019 / 42
Slide 43: Adjusting items
Appendices Adjusting items FY19 FY18 £m £m 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 Operating items Transaction costs Cash (1.4)
Slide 44: Consolidated balance sheet
Appendices Consolidated balance sheet FY19 FY18 £m £m Goodwill and intangible assets 480.6 469.1 Non-current assets Other non-current assets 52.8 50.5 533.4 519.6 Trade debtors 36.0 34.7 Prepayments 17.5 12.5 Current assets Other current assets 8.8 19.4 (60.9) 62.3 66.6 (76.9) Net debt (111.7) (82.7
Slide 45: Future consideration
Appendices Future consideration Deferred Consideration – Cash Settle Puts & Calls - Cash Settle Financial Year £m Financial Years1 £m Payable Fasteners - 2020 ABEC 1.0 2020 Indobuild 1.9 2020 1.0 Scoop - 2020 1.9 Puts & Calls - Equity Settle £m Financial Years1 ABEC 13.0 2020 13.0 1 Earliest financi
Slide 46: Banking facility
Appendices Banking facility At 30 September 2019 › Net debt - £111.7m Undrawn › 1.9x headline EBITDA £14m › 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:E
Slide 47: Net debt bridge
Appendices Net debt bridge Cash Flow from Operations Acquisitions September 2018 (excl. TAG) Dividends & Tax TAG & Disposals FX Net Other September 2019 (£82.7m) (£25.6m) £51.2m (£111.7m) (£12.1m) (£32.5m) (£0.2m) (£9.8m) Preliminary results: year ended 30 September 2019 / 47
Slide 48: Venue relationships
Appendices Venue relationships Venue Loans / Prepayments FY19 FY18 £m £m Russia - 4.7 Central Asia 0.2 0.2 Total 0.2 4.9 Preliminary results: year ended 30 September 2019 / 48
Slide 49: Cash generated from operations
Appendices Cash generated from operations 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 op
Slide 50: Consensus forecast
Appendices 1 Consensus forecast 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
Slide 51: Shareholder structure as at 31 October 2019
Appendices Shareholder structure as at 31 October 2019 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.
Slide 52: Managing the portfolio
Appendices Managing the portfolio Higher Event Quality & Potential Lower Growth Mature Challenged 89 less profitable Market tailwind Stable, mature market Facing market or shows discontinued competitive threat since start of TAG Large >£1.0m revenue Use full suite of Pricing, show value Manage pro-
Slide 53: Source of acquisitions
Appendices Source of acquisitions Acquisitions likely to come from the following sources: Owner-operated Bolt-on market- founders looking for leading events which Non-core assets someone to take the will accelerate our (e.g. Mining Indaba business to the next geo-clone strategy acquisition by Hyve)
Slide 54: Product-led acquisitions
Appendices Product-led acquisitions Example Screening Criteria Size M&A Distinct Customer funnel Value Proposition Structurally Attractive Market for Exhibitions Phase 1 Phase 2 Phase 3 Phase 4 High Growth Underlying Quick screening Thorough analysis Due diligence Transaction Market Objective “be ef