TIDMHYVE
RNS Number : 2462M
Hyve Group PLC
07 May 2020
7 May 2020
Hyve GROUP PLC
("Hyve" or the "Group")
INTERIM RESULTS ANNOUNCEMENT
Coronavirus update
-- Decisive management action has been taken to reduce costs and
manage cash and liquidity.
-- Underwritten rights issue to raise GBP126.6m separately announced
today, to provide security through the COVID-19 crisis and support
the Group's long-term success.
-- Waivers obtained for the leverage ratio and interest cover covenants
up to and including March 2022 and additional liquidity of GBP35m
secured through deferrals of the next two term loan repayments
until December 2023, previously due in November 2020 and November
2021, conditional on the successful completion of the rights
issue.
-- Postponement Plan has moved 30 events to later this financial
year, 18 are postponed to FY21 and 13 have been cancelled in
this financial year.
-- Close collaboration with customers to ensure attendance at events
when they are rescheduled.
-- Continued productive dialogue with venue owners to defer and
rollover costs for postponed or cancelled events.
-- Accelerating omni-channel strategy to connect with customers
online with Shoptalk leading the way.
Financial highlights
Six months to Six months to
31 March 2020 31 March 2019
Volume sales 308,500 m(2) 354,300 m(2)
Revenue GBP96.3m GBP107.8m
Headline profit before tax(1) GBP19.8m GBP24.5m
(Loss) / Profit before tax GBP(168.3)m GBP1.9m
Headline diluted earnings per share(2) 2.0p 2.3p
Diluted earnings per share (21.6)p (0.1)p
Interim dividend per share Nil 0.9p
Adjusted net debt(3) GBP157.2m GBP108.9m
-- Revenue of GBP96.3m (2019: GBP107.8m), impacted by international
government restrictions to control coronavirus.
-- Despite the impact of coronavirus, revenue increased 1% on a
like-for-like basis(4) and by 3% including biennials and timing
differences.
-- Headline profit before tax of GBP19.8m (2019: GBP24.5m), due
to event postponements and cancellations as a result of coronavirus.
-- Statutory loss before tax of GBP168.3m (2019: profit of GBP1.9m),
after GBP166.8m of non-cash impairments as a result of the coronavirus
outbreak.
-- Cash conversion(5) of 137% (2019: 102%), owing to strong cash
collection pre-coronavirus but lower profits due to event postponements
and cancellations in March.
-- Dividends suspended and future dividends will be kept under review
and subject to bank waiver restrictions.
-- GBP110.1m acquisition of Shoptalk and Groceryshop in December
2019, two US-based market-leading events focused on e-commerce
for retail and grocery. Shoptalk did not take place in the period
due to coronavirus and Groceryshop has been cancelled this financial
year, with the next event to be run in FY21.
-- Adjusted net debt increased from GBP108.9m to GBP157.2m following
the acquisition of Shoptalk and Groceryshop.
Mark Shashoua, CEO of Hyve Group plc, commented:
"We started this year in a very strong position. We reported
strong like-for-like growth in Q1 and added two market-leading
products, Shoptalk and Groceryshop to our portfolio.
When the pandemic began, we initiated Project Fortress - Hyve's
immediate response to COVID-19 - leaving no stone unturned. We
responded rapidly and decisively by rescheduling events, reducing
our costs, managing cash and supporting our customers and people
through this crisis. In these unprecedented circumstances we have
done everything we can and at pace to protect the business. Today
we have strengthened our financial position through a GBP126.6m
fully underwritten rights issue, to provide additional security
through this crisis and to support the long-term success of the
business.
Market-leading events act as a key trading platform for many
industries and will play a vital role in reigniting economies, and
we are working closely with customers, government and industry
bodies to make this happen. We have also accelerated our focus on
building our omni-channel capabilities driven by the Shoptalk and
Groceryshop acquisition. Digital will not replace face-to-face
events, but it complements them with online activity that supports
our customers year-round and maximises the profile of our
brands.
Whilst the immediate impact of temporary government restrictions
has been severe, we believe these are short term challenges. Our
strategy of building a portfolio of market-leading events and the
investment made over the last three years puts us in a strong
position when we exit this crisis."
1. Headline profit before tax is defined as profit before tax and
adjusting items, which include amortisation of acquired intangibles,
impairment of goodwill, intangible assets and investments, profits
or losses arising on disposal of Group undertakings, restructuring
costs, transaction and integration costs on completed and pending
acquisitions and disposals, tax on income from associates and
joint ventures, gains or losses on the revaluation of deferred/contingent
consideration and on equity option liabilities over non-controlling
interests, and imputed interest charges on discounted equity
option liabilities - see note 3 to the condensed consolidated
financial statements for details.
2. Headline diluted earnings per share is calculated using profit
attributable to shareholders before adjusting items - see notes
3 and 6 to the condensed consolidated financial statements for
details.
3. Adjusted net debt is defined as cash and cash equivalents after
deducting bank loans. This is therefore prior to any lease liabilities
recognised on the balance sheet.
4. Like-for-like results are stated on a constant currency basis
- translating the current year results at their equivalent reported
rates in the comparative period - after excluding events which
took place in the current period but did not take place under
our ownership in the comparative period and after excluding events
which took place in the comparative period but did not take place
under our ownership in the current period. For clarity, this
excludes all:
* Biennial events;
* Timing differences (i.e. events that ran in only one
of the current or comparative periods, due to changes
in the event dates);
* Launches;
* Cancelled or disposed of events that did not take
place under our ownership in the current year;
* Acquired events in the current period; and
* Acquired events in the comparative period that didn't
take place under our ownership in the comparative
period (i.e. they took place pre-acquisition).
See 'Trading highlights and review of operations' for further
detail.
5. Cash conversion is defined as cash generated from operations
before net venue utilisation (advances and prepayments to venues
less utilisation of venue advances and prepayments) and the cash
impact of the adjusting items included in the definition of headline
profit before tax, expressed as a percentage of headline profit
before tax adjusted for net finance costs and non-cash profits,
including foreign exchange gains/losses, depreciation and amortisation.
Enquiries:
Mark Shashoua, Chief Executive Officer / Andrew Beach, Chief Financial Officer Hyve Group plc 020 3545 9000
Charles Palmer / Emma Hall / Chris Birt / Jamille Smith FTI Consulting 020 3727 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.
Hyve Group is a public limited company and has been listed on
the main market of the London Stock Exchange since 1998.
Interim Management Report
Executive summary
Hyve had a good start to the financial year, with a strong first
quarter of trading in which revenues were up 7% on a like-for-like
basis, driven by double-digit growth from Africa Oil Week and
Yugagro. After also taking into account the performance of biennial
events (compared to their previous editions two years ago) and
timing differences, like-for-like revenue growth in the first
quarter was 12%. We ran 45 events in the first half of the
financial year, including four of our top 10 events. Yugagro,
Mining Indaba and Bett delivered strong year-on-year revenue
growth, while Spring Fair slowed the rate of decline compared to
the prior period despite being impacted by Brexit and reduced
attendance as a result of the coronavirus, which at that stage was
primarily impacting events due to Chinese travel restrictions.
Overall, like-for-like revenue in the first half was up 1% and
after taking into account the performance of biennial events and
timing differences was up 3%.
This strong start to the year was supported by the GBP110.1m
acquisition in December 2019 of two acclaimed and successful
events, Shoptalk and Groceryshop. This acquisition delivered
against our strategy of making selective product-led acquisitions
and further strengthens our focus on market-leading events.
Shoptalk is expected to become our largest event by revenue and
supports the significant expansion of our Global Brands
portfolio.
The addition of these two world-class brands to our business led
to the Group entering the FTSE 250 in January 2020. This promotion
was reward for the transformative work undertaken over the past
three years through the Transformation and Growth ("TAG") programme
and reflects the strength of the market-leading portfolio of events
we now run.
Managing the impact of the coronavirus
After a strong start to the year, the impact of the coronavirus
started to have a significant adverse impact on the business from
early March. By that stage we had already acted decisively and
activated several measures to protect the business for the
long-term. These include:
-- Setting up a taskforce to deal with all aspects of the business
affected by the coronavirus ("Project Fortress");
-- Implementing a comprehensive rescheduling strategy ("Postponement
Plan") for our events, ensuring that any decisions made are in
the best interests of customers and any rescheduled events will
continue to provide the premium experience that they have come
to expect;
-- Initiating a cost management programme to materially reduce costs
and preserve cash;
-- Seeking additional liquidity to strengthen the Group's balance
sheet and provide security through the crisis; and
-- Accelerating our omni-channel strategy to allow our customers
the ability to network, learn and connect online.
To protect the long-term future of the business the Group has
today announced an underwritten rights issue of GBP126.6m alongside
a package of bank covenant waivers and additional liquidity through
the deferral of scheduled term loan repayments.
Immediate response to COVID-19: Project Fortress
In the early days of the coronavirus outbreak we mobilised a
dedicated task force, Project Fortress, to lead on all aspects of
the impact of the crisis. The taskforce began by modelling
potential scenarios, the impact each would have on the business and
steps that we should take to mitigate risk. It also put in place
the framework which has allowed us to operate an effective rolling
Postponement Plan.
From an operational perspective, the Postponement Plan assumes
that events will take place from August onwards. However, we took a
more conservative approach to modelling for liquidity purposes,
given the uncertainty about when markets will reopen, and a
downside scenario [1] assumes events will not take place before the
end of the calendar year, with the exception of a small number of
our events in China. We took swift action to reduce costs and
manage cash and liquidity in line with the downside scenario.
Under Project Fortress we have instigated 10 different work
streams with clear management accountability for each, so that we
can maintain operational flexibility whilst ensuring effective and
timely decision-making. The progress of Project Fortress is tracked
on a daily basis. Weekly Board calls are held with others scheduled
as required. Daily Executive meetings and weekly trading meetings
take place to track sales and cash collection.
One major benefit from the work undertaken during the TAG
programme, where a centralised operating model based on best
practice was implemented, is that our global teams are now able to
replicate processes and activities consistently, which has made the
business much more dynamic in reacting to a crisis.
[1] Consistent with the reasonable worst case scenario included
in the Prospectus for the rights issue published today.
Downside scenario planning
While we continue to work towards delivering market-leading
events in line with our Postponement Plan, we have also prudently
undertaken scenario analysis to assess the potential financial
impact of the coronavirus on our business. Our downside scenario
has informed cost savings and cash management plans as well as the
financing measures announced alongside our FY20 interim financial
results.
The key assumptions underpinning the downside scenario are:
-- No events take place until 1 January 2021, with the exception
of ChinaCoat, our 50% owned joint venture event scheduled for
December 2020, five domestic Chinese events planned for summer
2020 and one domestic Chinese event in November 2020;
-- All other events currently scheduled to take place prior to 30
September 2020 are cancelled, while events that were originally
scheduled to take place in the three-month period ending 31 December
2020 are postponed until later in FY21;
-- Revenue for FY20 is below expectations prior to the outbreak
by approximately 60% and approximately 55% below revenue for
FY19; and
-- Revenue for FY21 is below expectations prior to the outbreak
by approximately 30% and below revenue for FY19 by approximately
10%, on the assumption that the global economic backdrop will
take some time to stabilise and sales cycles will be reduced.
While we expect that the disruption caused by the coronavirus
may begin to normalise in the coming months, as evidenced by the
resumption of third-party trade events in China from April onwards,
we consider it prudent to ensure contingency for a more prolonged
period of disruption as envisaged by the downside scenario.
Managing costs and cash flows
Our approach to managing our cost base and cash has been
prudent. While the Postponement Plan assumes events will take place
from August onwards, we are managing costs in line with our
downside scenario, in which no events take place this calendar year
except those in China.
The measures taken to reduce costs and preserve cash
include:
-- People-related cost savings : a freeze on recruitment has been
implemented and the contracts of temporary staff have been terminated.
A collective consultation process has recently concluded in relation
to potential redundancies and is expected to result in further
savings from July onwards. We have, in seeking additional staff
savings in the short term, placed 135 members of full-time staff
on a "furlough" arrangement in accordance with the UK Government
Coronavirus Job Retention Scheme announced on 26 March 2020.
In addition, all Directors and a significant number of key managers
globally have agreed to take a temporary 20% reduction in salary
on a voluntary basis, bonus schemes have been removed and a number
of staff are working reduced hours with much of the UK workforce,
the largest in the Group, moving to a four-day week for a period
of three months starting from May;
-- Non-people-related cost savings : a Group-wide ban on non-essential
travel and internal events, removal of non-sales incentives and
awards, removal of expenses reimbursement and reduction of internal
training initiatives have been implemented;
-- Reduced capital expenditure : a significant reduction of capital
expenditure has already been applied with only essential replacement
of assets and equipment now being permitted. This includes a
delay to the roll-out of a Group-wide ERP system which was the
final element of the TAG Programme to be implemented; and
-- Events and venue savings : discussions are on-going with venue
operators regarding the potential to roll forward costs associated
with cancelled or postponed events. People-related cost savings
as a result of fewer onsite staff, as well as lower requirement
for content and other event related costs are also planned.
The cost saving programme outlined above is intended to identify
and implement up to GBP10m of savings in the current financial year
(approximately GBP9m income statement; GBP1m capital expenditure)
and GBP42m in FY21 (approximately GBP40m income statement, GBP2m
capital expenditure).
In addition, the Board has taken the decision not to declare any
dividends for the current financial year and the decision to make
dividend declarations in future periods will remain under review
and subject to bank waiver restrictions.
Postponement Plan
To ensure the safety of our colleagues and event communities,
and in-line with international government directives, we have
implemented a rolling Postponement Plan for our events.
Based on the latest Postponement Plan, we are currently
scheduled to run 96 events in FY20. In the first half of FY20, 45
events were held leaving 51 events to take place in the second half
of the financial year, the vast majority of which are now due to
take place between late July and the end of September 2020. To date
we have cancelled 13 events that had been scheduled to take place
during FY20, with these events having contributed revenue of GBP25m
in FY19, excluding Groceryshop which was acquired during the
current financial year but has been cancelled. 18 events scheduled
to take place during FY20 have been postponed to FY21, with these
events having contributed revenue of GBP21m in FY19.
Vital to our long-term success has been regular dialogue with
our customers, buying groups and other stakeholders for each event.
By keeping customers informed and up to date with our plans, we
will ensure the relationships we have spent years, and in some
cases decades building, are maintained once our event programme
restarts.
From a financial perspective, the Postponement Plan has also
included productive dialogue with many venue owners to rollover
certain costs to the new dates for postponed events or, in the case
of cancelled events, to the FY21 edition. Similarly, we have had
positive conversations with a number of customers in relation to
cash already received for those events.
We expect reduced attendance at, and revenue generated by,
events which are held during the remainder of FY20 and in FY21,
primarily because of existing travel restrictions, potential
reluctance to travel to other countries or reduced corporate travel
budgets. We expect domestic audiences to recover more quickly than
international audiences as people may be more willing to travel to
events within their own country and internal domestic restrictions
on travel may be eased sooner. In addition, even following the
easing of the outbreak and the lifting of related restrictions, the
occurrence of second or subsequent waves of infection or the
establishment of "new normal" protocols to fend off infection would
continue to adversely impact attendance at, and revenue generated
by, the Group's future events.
Financing and liquidity
Alongside our FY20 interim financial results, we announced an
underwritten rights issue to raise gross proceeds of GBP126.6m,
with full details of that transaction set out in the rights issue
announcement. In addition, we secured an extra GBP35m of liquidity
from our lenders through the deferral of scheduled term loan
repayments of GBP17.5m each in November 2020 and November 2021
until maturity in December 2023 and obtained covenant waivers up to
and including March 2022, contingent on the rights issue.
Earlier in the period, in December 2019, we refinanced our
external debt facility, giving us access to a total facility of
GBP250m, GBP100m as a term loan and GBP150m as a revolving credit
facility, from a syndicate of five banks, Commerzbank, HSBC UK,
Citibank, Barclays and HSBC US. The facilities terminate in
December 2023 with the option, subject to certain conditions, to
extend by a further year. The scheduled annual repayments of the
term loan, prior to the repayment deferrals outlined above, are for
GBP17.5m to be repaid in November 2020, with further repayments
each subsequent November for GBP17.5m, GBP20.0m, GBP22.5m, and a
final repayment for GBP22.5m on the termination date.
We are also in active discussions in relation to accessing the
package of measures announced by HM Treasury, including the COVID
Corporate Finance Facility ("CCFF"). This facility is designed to
support liquidity among larger firms, helping them to bridge
short-term outbreak-related disruption to their cash flows. We have
submitted an application for the CCFF to the Bank of England but
there remains uncertainty as to our eligibility to such funding. We
are also actively investigating the availability other governmental
programmes in the UK and in other markets in which we operate.
Safeguarding our people
We are taking special measures to support our own people during
the epidemic. Almost all of our colleagues are now working from
home - in the UK, USA, Russia, Turkey, the Ukraine, Central Asia
and India - with each location benefitting from the investment in
technology made through the TAG programme. Our colleagues in China
have now returned to the office and measures have been put in place
to protect them, such as social-distancing, additional cleaning as
well as the provision of extra hand sanitisers and masks.
We have also put a strong emphasis on communications to keep our
people connected, via weekly CEO video updates, managers keeping in
touch every day with their teams by video and conference calls and
virtual Town Halls in every region, while the Regional Directors
issue regular newsletters sharing stories between the regions.
A leading role in the safe return to work
We are working with the industry and playing a leading role in
establishing new ground rules to ensure the safety of customers and
colleagues when events re-commence. We are part of an Advisory
Panel working with the Minister of Tourism in the UK and are
working alongside national and international industry bodies, such
as the Association of Events Organisers in the UK, the Society of
Independent Show Organisers in the US and UFI, the Global
Association of the Exhibition Industry, in order to develop best
practice guidelines for the industry when restrictions are
lifted.
We will work within local government guidelines as markets
reopen, at the same time as ensuring that we adhere to
international standards of quality and safety. We continue to
examine a wide range of measures to ensure customer safety,
including:
-- Masks, disinfectant and hand sanitisers;
-- On-site temperature testing;
-- Larger aisles that enable social distancing;
-- Staggering attendance times to reduce the number of visitors
in the hall at any one time;
-- Putting in place frequent and regular deep cleaning;
-- Signage with health and hygiene reminders for exhibitors and
visitors; and
-- Training all our people on COVID-19 safety and cleaning protocols.
The implementation of agreed procedures and protocols we adopt
will involve additional staff training in support of those actions,
alongside the delivery and monitoring of onsite processes. Once our
response measures are agreed, we will communicate with our
customers and provide support to them regarding the navigation of
any additional travel controls, such as visa, permit or other
certifiable entry requirements.
A greater focus on market-leading events post COVID-19
We have worked intensively over the last three years to deliver
the TAG Programme, which has fundamentally transformed the business
into one with a global portfolio of market-leading events,
leveraging a centralised operating model to deliver a premium
product to exhibitors and attendees. This process has been
underpinned by our vision to create the world's leading portfolio
of content-driven, must-attend events delivering an outstanding
experience and return on investment for our customers.
Although the coronavirus outbreak continues to have a material
impact on the events industry as a whole, we continue to believe in
the power of face-to-face events for businesses. Events are central
to winning new business, sourcing products, staying up-to-date with
industry trends and finding new ideas and innovations. The backdrop
of the outbreak is likely to have a significant impact on smaller
operators and we believe that, over the long term, this will
strengthen our market-leading events over second tier competitor
events, as customers prioritise attendance at the number one
shows.
Our scalable operating model, combined with our selective
approach to acquiring best in class events, had, until the market
was impacted by the coronavirus, opened up a number of incremental
growth opportunities. These remain opportunities, which we will
reassess in light of market changes. For example, Shoptalk and
Groceryshop have developed an industry-leading Hosted Buyer
Programme, which is underpinned by bespoke software and includes a
platform that facilitates group meetings among customers for the
purposes of engaging in conversations in relation to pre-defined
topics of mutual interest. The software underpinning the Hosted
Buyer Programme for Shoptalk and Groceryshop represents an
opportunity to be introduced across other Hyve events.
Acceleration of our omni-channel strategy
We are accelerating our existing omni-channel strategy which
adds online elements to our physical events, to create multiple
touch points for our customers to learn, network and connect
online.
We have already begun to address the trend of virtual engagement
with our customers as seen most recently with the launch of
Shoptalk Virtual Events. Shoptalk Virtual Events are a new set of
products that offer ground-breaking content, connections and
community to the entire retail ecosystem in three different
formats:
-- We launched Shoptalk Virtual Tabletalks in April 2020: These
are Interactive peer-to-peer 45-minute virtual conversations
that enable in depth discussions and briefings based on specific
topics. Shoptalk Virtual Tabletalks carefully match up to six
individuals from retailers and brands who come together via video
conference to share insights, address issues and generate actionable
takeaways. Tabletalks are interactive, video-based conversations
designed for the purposes of creating new connections. As with
those table talks conducted onsite at Shoptalk's in-person events,
Shoptalk Virtual Tabletalks are invite-only for retailers and
brands.
-- Shoptalk Virtual Conferences to be launched later in 2020: A
series of panels, presentations and interviews that address the
most critical challenges and opportunities in retail today. Conferences
are conducted via livestream video and organised around a single
theme. These conferences are open for anyone to register to attend.
-- Shoptalk Virtual Meetings will be launched later in 2020: Video
conference-enabled versions of the Group's Hosted Buyers Programme,
Shoptalk Virtual Meetings will also incorporate the many other
networking and collaboration initiatives traditionally conducted
in connection with Shoptalk's in-person events, creating the
ability for individuals throughout the retail industry to engage
with each other across a wide range of subjects in distributed
and digitally interactive environments.
Reigniting industries and businesses
Market-leading events are key trading platforms for major
industries, governments and regional authorities and will play a
vital role in reigniting economies as we exit this global
crisis.
Once it is safe to do so, our portfolio of premium events will
bring people together from all corners of the globe where they can
get back to connecting, learning, inspiring and innovating.
Outlook
The coronavirus continues to have a material impact on the
events industry as a whole and we are not immune to that. However,
we firmly believe in the power of face-to-face contact and are
confident that in time, events will once again be sparking
connections, forming communities, broadening horizons and enabling
opportunities for millions of people in business around the
world.
The COVID-19 outbreak has reminded us of the power of human
connections, which have never been more important than now. The
time that people across the world are spending away from others is
reminding us that, whilst technology is incredibly important and
will undoubtedly increase the return on investment we offer our
customers in the future, it does not replace what can be achieved
when people meet face-to-face.
Mark Shashoua
Chief Executive Officer
Financial performance
Statutory results
Revenues for the first six months of the year were GBP96.3m
(2019: GBP107.8m), down GBP11.5m and 11% behind the comparative
period. Revenues in the period were impacted by the spread of the
coronavirus and the Postponement Plan implemented by the Group
following the restrictions put in place by governments across the
Group's markets. 14 events due to take place in the first six
months of the year were postponed or cancelled, including MITT, the
international travel and tourism event in Moscow, which will not
take place until the following financial year, and Shoptalk, the
newly acquired e-commerce event in Las Vegas, which has been
postponed until September.
Four top 10 events ran as planned in the first six months of the
year, including Bett, Mining Indaba and Yugagro, all of which
delivered strong year-on-year growth. Spring Fair took place in the
first half of the year and despite an ongoing impact from Brexit
and reduced attendance by Chinese exhibitors due to coronavirus
travel restrictions, the rate of decline slowed compared to the
previous year. Africa Oil Week, one of the Group's 20 largest
events, also performed very well delivering double digit revenue
growth.
The impact of foreign exchange rates has had a positive impact
of GBP0.2m on the translation of revenue into sterling when
compared to the prior period, largely as a result of the
strengthening of the Russian ruble relative to sterling in the
first few months of the financial year.
Loss before tax was GBP168.3m (2019: profit of GBP1.9m), after
non-cash impairment charges totalling GBP166.8m have been
recognised in respect of our UK, Bett, CWIEME and Azerbaijan
businesses, as well as our Indonesian joint venture. These
impairment charges are as a result of the coronavirus outbreak
which has increased discount rates due to the heightened risk
environment and reduced forecast operating profits following event
postponements and cancellations.
There was also an increased amortisation charge on acquired
intangible assets following the Shoptalk and Groceryshop
acquisitions which increased the total amortisation to GBP14.0m
(2019: GBP12.0m). A loss on disposal of GBP5.6m (2019: GBP3.1m) was
recognised as a result of the write-off of deferred consideration
receivable in respect of prior year disposals as, while we remain
committed to recovering the contractual amount in full, the
coronavirus outbreak has increased the credit risk. The loss after
tax is also after including transaction costs of GBP2.6m (2019:
GBP1.4m) incurred in respect of the acquisitions of Shoptalk and
Groceryshop and costs of GBP0.7m (2019: GBP3.4m) incurred in
integrating these acquired events into our portfolio. Restructuring
costs of GBP0.9m (2019: GBP2.1m) have been incurred in relation to
the finalisation of the TAG programme.
The impact of foreign exchange rates has had a GBP4.3m positive
impact on profits compared to HY19. The increased impact on profits
compared to revenue is due to gains recognised in the first six
months of the year as a result of balance sheet translations which
resulted in foreign exchange gains GBP4.0m higher than the
comparative period.
The average exchange rates over the first six months of the year
were:
Six months ended 31 March 2020 Six months ended 31 March 2019 Movement
Russian ruble 83.5 85.7 -3%
------------------------------- ------------------------------- ---------
Turkish lira 7.6 7.0 +9%
------------------------------- ------------------------------- ---------
Indian rupee 92.0 92.0 -
------------------------------- ------------------------------- ---------
Chinese renminbi 9.0 8.8 +2%
------------------------------- ------------------------------- ---------
Euro 1.16 1.14 +2%
------------------------------- ------------------------------- ---------
United States dollar 1.29 1.28 +1%
------------------------------- ------------------------------- ---------
Diluted earnings per share for the first six months were (21.6p)
(2019: (0.1p)).
Headline results
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 underlying 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. T he adjusting items presented are consistent
with those presented in the previous year.
The Group achieved like-for-like revenue growth of 1% despite
the ongoing impact of Brexit and reduced attendance by Chinese
exhibitors at certain events due to coronavirus travel
restrictions. After also taking into account the performance of
biennial events compared to their previous editions two years ago
and timing differences, like-for-like revenue growth was 3%. Prior
to the outbreak, first quarter revenues were up 7% on a
like-for-like basis, driven by Africa Oil Week and Yugagro, which
both delivered double-digit like-for-like growth. After also taking
into account the performance of biennial events compared to their
previous editions two years ago and timing differences,
like-for-like revenue growth in the first quarter was 12%.
Headline profit before tax for the first six months of the year
was GBP19.8m (2019: GBP24.5m). The results were adversely impacted
by event postponements and cancellations which had a GBP7.9m impact
on headline profit before tax, most significantly due to the
cancellation of MITT, due to take place in Russia in March. In
addition, the acquired Shoptalk event was originally due to take
place in March but has been postponed until September and therefore
the results include GBP2.8m of costs and no revenue in the period
post-acquisition.
This was offset in part by GBP2.4m of positive biennial and
timing differences, primarily in relation to the Paperex event in
India, and growth of GBP0.6m from annually recurring events, driven
by strong performances from Bett, Mining Indaba, Yugagro and Africa
Oil Week. The impact of foreign exchange rates also had a GBP4.3m
positive impact on profits compared to the six months ended 31
March 2019.
Headline diluted earnings per share for the first six months was
2.0p (2019: 2.3p), reflecting the decline in headline profits due
to the impact of coronavirus.
The following table reconciles statutory profit/(loss) before
tax to headline profit before tax:
Year ended
Six months to 31 March 2020 Six months to 31 March 2019 30 September 2019
GBPm GBPm GBPm
(Loss)/profit on ordinary activities
before taxation (168.3) 1.9 8.7
Operating items
Amortisation of acquired intangible
assets 14.0 12.0 24.1
Impairment of goodwill 124.0 - -
Impairment of intangible assets 42.0 - -
Impairment of investments in associates
and joint ventures 0.8
Loss on disposal of investments 5.6 2.4 3.2
Transaction costs on completed and
pending acquisitions and disposals 2.6 1.4 1.4
Integration costs
* Integration costs 0.7 2.5 5.3
* Costs to realise synergies - 0.9 1.5
Restructuring costs
* TAG 0.9 1.7 2.8
* Other - 0.4 1.4
Tax on income from associates and joint
ventures 1.5 1.7 1.9
Financing items
Write off of previously capitalised debt
issue costs on refinancing 1.3 - -
Revaluation of assets and liabilities on
completed acquisitions and disposals (5.3) (0.4) 0.1
__________ __________ __________
Headline profit before tax 19.8 24.5 50.4
Amortisation of acquired intangible assets relates to the
amortisation charge in respect of intangible assets acquired
through business combinations. The charge has increased in the
period, as a result of the amortisation of the intangible assets
recognised following the Shoptalk and Groceryshop acquisitions in
December 2019.
Impairment charges totalling GBP166.8m have been recognised in
respect of goodwill (GBP124.0m), acquired intangible assets
(GBP42.0m) and investments in our associates and joint ventures
(GBP0.8m). In the 2019 Annual Report and Accounts the Group
disclosed that the headroom of the Bett and UK CGUs was sensitive
to a reasonably possible change in the key assumptions used in the
value in use calculation, including an increase in discount rates
and a decline in the CGUs' operating profit growth rates. As a
result of the coronavirus outbreak, discount rates have increased
due to the heightened risk environment, while forecast operating
profits have declined significantly across the business in the
short term, reflecting the event postponements and cancellations.
Therefore, the forecast cash flows of these CGUs are no longer able
to support the carrying value of their assets and consequently
impairment charges of GBP44.7m and GBP108.3m have been recognised
in the Bett and UK CGUs respectively. Furthermore, the adverse
impact of the outbreak on discount rates and forecast cash flows
has resulted in combined impairment charges of GBP13.8m being
recognised in our CWIEME and Azerbaijan CGUs, and our Indonesian
joint venture Debindo. Refer to note 8 for further details.
The loss on disposal in the year of GBP5.6m relates to the
write-off of deferred consideration receivable in relation to prior
year divestments. The coronavirus outbreak has resulted in a
greater risk over the recoverability, however we remain committed
to recovering the contractual amounts due in full. In the previous
year the Group recognised a loss of GBP1.4m in relation to this
disposal and a GBP1.6m loss on disposal in relation to a number of
smaller disposals within Central Asia.
Transaction costs on completed and pending acquisitions and
disposals relate principally to costs incurred on the acquisition
of the Shoptalk and Groceryshop events completed in December 2019.
The most significant of these costs are professional and
consultancy fees incurred in relation to the due diligence and
legal procedures necessary for the completion of the deal. In the
previous year the costs recognised related to the acquisition of
Mining Indaba completed in October 2018.
Integration costs of GBP0.7m have been incurred, primarily in
relation to the integration of the Shoptalk and Groceryshop events.
The costs incurred primarily relate to the TSA agreements in place,
and most significantly the costs relating to the events' founders
and certain members of senior management, who are remaining in
their roles for a minimum of 12 months from acquisition in order to
oversee the events' transition to the new management team. In the
previous year integration costs of GBP5.3m were incurred in
relation to the Ascential Events business and the Mining Indaba
event, as well as GBP1.5m of costs incurred in order to realise the
synergy opportunities presented by these acquisitions.
Restructuring costs are those incurred in transforming the
business, primarily as a result of the TAG programme. In the
current period costs of GBP0.9m have been incurred in relation to
the finalisation of the TAG programme, including the development of
the global ERP software to be rolled out across the finance
function. In the prior year, in connection with the new strategic
direction of the Group, the focus on our Core events, and the
active management of the Group's portfolio of events, GBP1.4m of
restructuring costs were incurred in relation to the closure of the
Siberian business.
Tax on income from associates and joint ventures is an
adjustment to ensure headline profit before tax is presented
pre-tax. Statutory reported profits from associates and joint
ventures are presented post-tax, therefore, in order to present a
measure of profit before tax for the Group that is purely pre-tax,
the tax on associate and joint venture profits is added back when
reporting headline profit before tax. The tax on associates and
joint ventures is included within the headline post-tax measure of
profit and therefore headline profit after tax is presented
consistently with the statutory measure of post-tax profit.
Write off of previously capitalised debt issue costs on
refinancing is the accelerated non-cash amortisation of previously
capitalised financing costs upon refinancing of the Group's
external debt facilities in December 2019.
A number of the Group's acquisitions completed in recent years
have future earn-out commitments, either through deferred or
contingent consideration payments or through equity option
liabilities to increase our current shareholdings. These are held
on balance sheet at fair value and therefore change based on the
latest foreign exchange rates, the proximity of the settlement date
and the latest expectation of the settlement value. Revaluation of
assets and liabilities on completed acquisitions and disposals
include the gains from the revaluation of our equity options over
non-controlling interests in our subsidiaries (credit of GBP4.5m),
principally in relation to the remaining 40% interest in ABEC, the
2015 acquisition of the Indian exhibitions company including the
Acetech portfolio, the imputed interest credit on the unwinding of
the discount on the Group's deferred consideration receivable in
relation to the disposal of ITE Expo LLC (credit of GBP0.9m), and a
loss on the revaluation of the ITE Expo LLC deferred consideration
(charge of GBP0.1m).
Cash flows
The Group's cash flow generated from operations over the first
six months was GBP25.1m (2019: GBP16.6m) and cash conversion was
137% (2019: 102%), as presented below. Adjusted net debt at 31
March 2020 has increased to GBP157.2m (2019: GBP108.9m) following
the acquisition of Shoptalk and Groceryshop.
Six months Six months Year ended
to 31 March to 31 March 30 September
2020 2020 2019
GBPm GBPm GBPm
Cash generated from operations 25.1 16.6 40.3
Add back:
Net venue utilisation 0.9 5.0 -
Adjusting items (which have cash impact):
Transaction costs on acquisitions
and disposals 2.6 2.0 1.5
Integration costs 0.7 3.4 6.8
Restructuring costs 0.9 2.1 4.2
Other adjustments:
Adjustment to reflect timing of cash
flow for above adjusting items 0.8 - 1.9
Working capital adjustment on acquisitions - - 1.4
------------ ------------ -------------
Headline cash generated from operations
(A) 31.0 29.1 56.1
============ ============ =============
Headline operating profit 23.8 27.1 55.8
Add back:
Depreciation of property, plant and
equipment 2.3 0.7 1.7
Amortisation of computer software 0.7 0.7 1.3
Foreign exchange loss/(gains) on operating
activities (4.2) (0.1) 1.1
------------ ------------ -------------
Headline operating profit before non-cash
items (B) 22.6 28.4 59.9
============ ============ =============
Cash conversion % (A/B) 137% 102% 94%
Net venue utilisation is calculated as advances and prepayments
to venues less utilisation of venue advances and prepayments.
2020 interim dividend
The Board has taken the decision to not declare an interim
dividend (2019: 0.9p) for the year ending 30 September 2020.
Trading highlights and review of operations
During the period the Group organised 45 events (2019: 61
events) and volume sales for the period were 308,500 sqm (2019:
354,300 sqm). The reductions compared to the prior period primarily
reflect the postponements and cancellations following the
coronavirus outbreak.
A summary of the Group's volume sales, revenue and headline
profit before tax for the period is set out below.
Square metres sold Revenue Headline profit before tax
'000 GBPm GBPm
First half 2019 354 107.8 24.5
------------------- -------- ---------------------------
Biennial (2) (0.7) (0.2)
------------------- -------- ---------------------------
Timing (2) (0.4) (0.1)
------------------- -------- ---------------------------
COVID-19 postponements (31) (7.7) (3.8)
------------------- -------- ---------------------------
COVID-19 cancellations (18) (6.6) (4.1)
------------------- -------- ---------------------------
Non-recurring (4) (0.5) -
------------------- -------- ---------------------------
Disposals (6) (2.7) (0.6)
------------------- -------- ---------------------------
Annually recurring 2019 291 89.2 15.7
------------------- -------- ---------------------------
Acquisitions - - (3.5)
------------------- -------- ---------------------------
Launches 2 0.2 -
------------------- -------- ---------------------------
FX Translation - 0.2 4.3
------------------- -------- ---------------------------
Like-for-like change (15) 0.9 0.5
------------------- -------- ---------------------------
Annually recurring 2020 278 90.5 17.0
------------------- -------- ---------------------------
Timing 1 - 0.6
------------------- -------- ---------------------------
Biennial 29 5.8 2.2
------------------- -------- ---------------------------
First half 2020 308 96.3 19.8
------------------- -------- ---------------------------
Global Brands
The Global Brands division now comprises Africa Oil Week,
Breakbulk, Mining Indaba, Bett, CWIEME and the Shoptalk and
Groceryshop events acquired in December 2019. Overall revenues fell
by 2% compared to the comparative period, as a result of the
postponement of three events in Asia. On a like-for-like basis
revenues grew by 7%.
Africa Oil Week ran in November 2019 and performed very well,
achieving strong double digit like-for-like revenue growth,
demonstrating the positive impact of the new portfolio and event
leadership and the benefits of the TAG investment the event has
received in recent years. In the same portfolio, Mining Indaba ran
in February and also performed well with the event now fully
integrated in the Global Brands division having had a full show
cycle under Hyve ownership, delivering strong like-for-like revenue
growth.
Bett, the education technology event acquired as part of the
Ascential Events acquisition in July 2018, returned to revenue
growth after the decline reported in the prior period. This was
possible as a result of the investments made in the event team
since acquisition, as well as the restructuring of the event team
and adoption of Hyve's best practice.
The Breakbulk Americas event also ran in October delivering
strong like-for-like revenue growth.
Shoptalk and Groceryshop, two US-based market-leading e-commerce
events focused on the retail and grocery segments respectively,
were acquired in December 2019. Shoptalk was due to take place for
the first time under Hyve's ownership in March but was postponed
until September in response to the spread of coronavirus. As a
result, the decision was taken to postpone Groceryshop, originally
scheduled for September 2020 into the following financial year to
avoid a clash with Shoptalk.
As part of the Group's Postponement Plan, a number of other
Global Brands events have now been postponed, including CWIEME
Berlin, the largest event in the CWIEME portfolio and Breakbulk
Europe, the largest event in the Breakbulk portfolio, both
originally scheduled to take place in May 2020.
Asia
The Asia division comprises our businesses in India and China as
well as joint venture partnerships in both China and Indonesia.
Revenues for the Asia division were down 3% compared to the
comparative period with the positive impact of the biennial Paperex
event offset by the postponement of one event in China until later
in the year as a result of the coronavirus outbreak and reduced
revenues across the Acetech portfolio of construction events in
India. On a like-for-like basis revenues fell by 12% but increased
by 1% when including the impact of like-for-like growth from
Paperex compared to the previous edition organised two years
ago.
The performance across the Acetech portfolio reflected a
challenging trading environment in the Indian construction sector.
This was compounded by delays to the completion of the Pragati
Maidan venue in Delhi which impacted the Acetech Delhi event in
December 2019. Conversely, the biennial Indian paper event,
Paperex, achieved double-digit growth compared to the previous
edition two years ago.
A significant contributor to the division's profits is the
ChinaCoat event operated by our 50% owned joint venture partner,
Sinostar. The event took place prior to the outbreak of coronavirus
and contributed GBP6.8m (2019: GBP6.9m) to headline profits before
tax. Only one majority owned Chinese event took place in the period
with one other majority owned Chinese event postponed until later
in the current financial year.
The outbreak of the coronavirus has meant that a number of
events in Asia have been postponed. China felt the impact of
coronavirus much earlier than the rest of the world and is
therefore now at a more advanced phase of the virus' cycle. This
brings more confidence that our rescheduled events, and those
events still due to take place later in the year, will be able to
take place as planned.
Central Asia
The Central Asia division includes our events in Uzbekistan,
Kazakhstan and a smaller Azerbaijan portfolio following the
disposal of a number of events in the country in March 2019.
Revenues were 14% lower than the comparative period, reflecting the
disposal of the Azerbaijan events towards the end of the
comparative period, but on a like-for-like basis were up 27%.
The double-digit revenue growth is largely attributable to
Uzbekistan's performance as the region continues to benefit from
the new, investment-friendly Presidential regime with revenue
growth across the majority of its events in the first half of the
year.
Kazakhstan also reported strong like-for-like growth, driven by
the by the Agroworld Kazakhstan event which doubled its revenues
compared to the previous edition.
Eastern & Southern Europe
The Eastern & Southern Europe division is comprised of our
event portfolios in Turkey and Ukraine. The division reported a
revenue decline of 22% as a result of the postponement of the
international travel and tourism event in Kiev, UITT, originally
scheduled to take place in March 2020. On a like-for-like basis
revenues grew by 5% compared to the comparative period.
The only Turkish event scheduled to take place in the first half
was EMITT, the international travel and tourism event in Istanbul.
Despite challenges in the macroeconomic environment in Turkey the
event delivered revenue in line with the comparative period event
on a like-for-like basis.
Ukraine achieved like-for-like revenue growth of 11% with strong
performance across the events that took place in the first half of
the year. UITT and Pro Beauty Expo in Ukraine were due to take
place in March but have been moved to new dates towards the end of
the financial year as a result of the coronavirus outbreak.
Two Turkish events due to take place early in the second half of
the financial year, TurkeyBuild Istanbul and Beauty Eurasia, have
also been postponed until August and November respectively. A
number of Ukrainian events have also been postponed until later in
the financial year or early in the next financial year.
Russia
In March the international travel and tourism event, MITT, was
cancelled while the security event, Securika, was postponed until
August 2020. As a result, revenue for the division fell by 16%
compared to the comparative period, more than offsetting the
biennial impact of running the woodworking and furniture event,
Woodex. On a like-for-like basis, revenues increased by 14% and
increased by 16% when including the impact of like-for-like growth
from Woodex compared to the previous edition organised two years
ago.
The Russia division was performing very well prior to the
coronavirus outbreak with a notably strong performance at Yugagro,
the agriculture event in Krasnodar, which delivered another year of
double-digit like-for-like revenue growth, reflecting the continued
positive impact the TAG investments have had.
Mosbuild, the division's largest event, was due to take place in
early April but has been cancelled and will next take place in
April 2021. Customers on both cancelled events, Mosbuild and MITT,
have been approached with contract amendments to roll over their
bookings to the following edition and good progress has been made
on this to date.
UK
The UK division comprises Spring and Autumn Fair, Glee and our
UK fashion portfolio which includes Pure and Moda. Revenue fell
compared to the comparative period by 16%, impacted by the disposal
of the low profit BVE event that took place in February 2019. On a
like-for-like basis revenues declined by 12%, reflecting the
ongoing impact of Brexit and challenges facing the UK high
street.
Spring Fair, acquired from Ascential plc last year, is the
second largest event in the Hyve portfolio and takes place each
February at the NEC in Birmingham. Despite the ongoing impact from
Brexit and reduced attendance by Chinese exhibitors due to
coronavirus travel restrictions, the rate of decline slowed
compared to the previous year, reflecting progress made by the new
management team.
Events across the fashion portfolio struggled in the first half
of the year, impacted by Brexit uncertainty and the challenged UK
high street.
The two largest brands in the fashion portfolio are Pure, the
high-end fashion event which runs twice per year in Olympia and
Moda, the mid-market focused fashion event held twice annually at
the NEC in Birmingham. Both February editions reported
like-for-like double-digit revenue declines as a result of
challenges faced in the sector.
All of the division's remaining shows are scheduled to take
place as originally planned in the latter part of the second half
of the financial year, with the exception of Moda, which has been
moved from August to September.
Principal risks and uncertainties
The principal risks and uncertainties listed below represent
those that we consider have the potential for the greatest impact
on our ability to meet our strategic objectives.
-- Coronavirus outbreak
-- Political and economic instability
-- Repatriation of profits from subsidiaries
-- Breach of anti-bribery laws or similar
-- Breach of sanctions or sanctions extensions
-- Breach of health and safety regulations
-- Cyber-attack causing systems to fail or leading to data loss
-- Acquisition integration
-- Effective control over non-wholly owned entities
-- Venue unavailability
-- Breach of GDPR regulations
-- Liquidity risk
-- Performance metrics out of alignment
With the exception of the coronavirus outbreak, all of these
were also disclosed as principal risks and uncertainties in the
2019 Annual Report. Refer to pages 32-35 of the 2019 Annual Report,
where details of the potential impact and mitigating actions in
place for each is discussed. During the period, a number of these
risks increased as a result of the coronavirus outbreak, which is
discussed further below.
Coronavirus outbreak
In addition to the risks noted above, the recent coronavirus
outbreak demonstrates the Group's exposure to the risk of an
emergence of a communicable disease, which has the potential to
both restrict the Group's ability to run events and reduce the
attendance at its events.
The recent outbreak has negatively impacted economic conditions
and customer demand globally. In March 2020, the outbreak escalated
into a global pandemic leading to unprecedented societal,
governmental and personal impacts and restrictions. Each region in
which the Group operates reacted differently at that stage and, in
most instances, governments and authorities placed certain
restrictions on freedom of movement, travel and on large gatherings
in order to contain the spread of the virus. The events industry is
experiencing significant and unprecedented disruption across
multiple geographies and sectors with the substantial majority of
events scheduled to take place since early March having been
cancelled or postponed worldwide.
Given the travel and other restrictions imposed by governments
and corporate clients, the operational demands of the Group's
events and the commercial landscape required in order to most
successfully run an event, the Group has been able to run just one
event since the start of March 2020 and has initiated a
postponement programme to delay events until later in the current
financial year or early in the next financial year.
The exposure to an extended period of time during which a
communicable disease severely impacts the Group's ability to
organise events represents a principal risk for the Group. This has
the potential to materially reduce revenues, increase the costs of
organising events and adversely affect the Group's business, cash
flows, financial condition and results of operations.
The extent to which the coronavirus outbreak is impacting the
Group represents an ongoing situation which the Directors will
continue to address going into the second half of the financial
year.
Mitigation
As a consequence of the escalation of the outbreak, the Group
put in place a large-scale events postponement plan across its
markets. 61 events have been rescheduled to new dates, 30 within
the current financial year to 30 September 2020, 18 to the
financial year to 30 September 2021 and 13 events have been
cancelled outright.
The Group has event cancellation insurance policies in place to
cover a number of the Group's largest events. These policies
provide cover for communicable disease in certain specified
circumstances. Given the novel nature and impact of the coronavirus
outbreak it is unknown how insurers will respond to the large
volume of claims likely to be made in response to the outbreak and
therefore any successful claims could take a significant amount of
time to result in proceeds being received by the Group.
The Group has undertaken significant cost-cutting and cash flow
management measures to ensure that cash outflows are minimised and
working capital is managed as effectively as possible. These
include actions related to staff restructuring, removing
non-essential spend, reducing capital expenditure, seeking event
and venue savings and the decision to not declare dividends for the
year ending 30 September 2020. Further measures have been
identified that can be implemented as necessary as the situation
develops.
Throughout the developing outbreak, the health and safety of the
Group's employees, customers and exhibitors has been the Directors'
priority and the Group has followed the advice of the World Health
Organization ("WHO") in response to the crisis.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Interim Management Report. The financial
position of the Group, its cash flows and liquidity position are
described in the interim financial statements and notes. The Group
has the financial resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the
date of this report.
The Group is dependent on the ability to be permitted to run
events attended by a significant number of people and is therefore
exposed to restrictions imposed as a result of communicable
diseases, particularly where government, local authority or
corporate restrictions are in place that either prohibit mass
gatherings or restrict travel to and from events. The Group
operates in territories that can be unpredictable and unexpected
geopolitical and economic events such as terrorism, sanctions,
currency controls and exchange rate movements can have an impact on
the Group's reported trading performance. Given the Group's
reliance on its relationships with venue owners to continue to
operate its events, the unavailability of a venue at short notice,
damage to a venue or a dispute with a venue owner could negatively
affect the Group. A significant deterioration in trading from the
major markets (notably Global Brands, Russia and/or the UK) could
also adversely impact the Group's results.
The Group has today announced an underwritten rights issue to
raise gross proceeds of GBP126.6m, with an additional GBP35m of
liquidity obtained through the deferral of scheduled term loan
repayments of GBP17.5m each in November 2020 and November 2021
until December 2023. Waivers for the leverage ratio and interest
cover covenants have also been obtained up to and including March
2022. As a consequence, following completion of the rights issue,
the Directors believe that the Group is now well placed to manage
its business risks successfully. The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, the Group
continues to adopt the going concern basis in preparing the interim
report and financial statements.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of interim financial statements, which
have been prepared in accordance with IAS 34 "Interim Financial
Reporting" give a true and fair view of the assets, liabilities,
financial position and profit or loss of the undertakings included
in the consolidation as a whole as required by DTR 4.2.4R;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact, and description of principal risks and
uncertainties for the remaining six months of the financial year);
and
(c) the interim management report includes a fair review of the
information required regarding related party transactions (under
DTR 4.2.8R).
By the order of the board
Chief Executive Officer
Mark Shashoua
7 May 2020
Condensed Consolidated Income Statement
For the six months ended 31 March 2020
Six months to 31 March Six months to 31 March Year ended 30 September
2020 (Unaudited) 2019 (Unaudited) 2019 (Audited)
Adjusting Adjusting Adjusting
items items items
(note (note (note
Headline 3) Statutory Headline 3) Statutory Headline 3) Statutory
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2 96,263 - 96,263 107,793 - 107,793 220,723 - 220,723
Cost of sales (63,424) - (63,424) (67,609) - (67,609) (133,343) - (133,343)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Gross profit 32,839 - 32,839 40,184 - 40,184 87,380 - 87,380
Other operating
income 99 - 99 149 - 149 934 - 934
Administrative
expenses (19,800) (190,651) (210,451) (20,658) (21,327) (41,985) (39,708) (39,691) (79,399)
Foreign exchange gain
on operating
activities 4,193 - 4,193 143 - 143 (1,140) - (1,140)
Share of results of
associates
and joint ventures 2 6,468 (1,521) 4,947 7,264 (1,730) 5,534 8,297 (1,900) 6,397
_________ _________ _________ _________ _________ _________ _________ _________ _________
Operating
profit/(loss) 23,799 (192,172) (168,373) 27,082 (23,057) 4,025 55,763 (41,591) 14,172
Investment revenue 406 5,349 5,755 325 618 943 1,019 1,335 2,354
Finance costs (4,371) (1,353) (5,724) (2,872) (241) (3,113) (6,374) (1,439) (7,813)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) before
taxation 2 19,834 (188,176) (168,342) 24,535 (22,680) 1,855 50,408 (41,695) 8,713
Tax on profit/(loss) 4 (3,100) 3,220 120 (6,506) 5,047 (1,459) (13,115) 8,530 (4,585)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) for the
period 16,734 (184,956) (168,222) 18,029 (17,633) 396 37,293 (33,165) 4,128
_________ _________ _________ _________ _________ _________ _________ _________ _________
Attributable to:
Owners of the
Company 15,781 (184,956) (169,175) 17,057 (17,633) (576) 36,313 (33,165) 3,148
Non-controlling
interests 953 - 953 972 - 972 980 - 980
_________ _________ _________ _________ _________ _________ _________ _________ _________
16,734 (184,956) (168,222) 18,029 (17,633) 396 37,293 (33,165) 4,128
_________ _________ _________ _________ _________ _________ _________ _________ _________
Earnings per share
(p)
Basic 6 2.0 (21.7) 2.3 (0.1) 4.9 0.4
Diluted 6 2.0 (21.6) 2.3 (0.1) 4.9 0.4
_________ _________ _________ _________ _________ _________ _________ _________ _________
The results stated above relate to continuing activities of the
Group.
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2020
Six months to Six months to
31 March 2020 31 March 2019 Year ended 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit/(loss) for the period attributable to
shareholders (168,222) 396 4,128
Cash flow hedges:
Movement in fair value of cash flow hedges (332) 351 269
Fair value of cash flow hedges released to the
income statement 42 142 655
Currency translation movement on net investment
in subsidiary undertakings (2,869) 2,977 7,561
__________ __________ __________
Total other comprehensive income (3,159) 3,470 8,485
__________ __________ __________
(171,381) 3,866 12,613
__________ __________ __________
Tax relating to components of comprehensive income 62 (72) (153)
__________ __________ __________
Total comprehensive income for the period (171,319) 3,794 12,460
__________ __________ __________
Attributable to:
Owners of the Company (172,272) 2,822 11,480
Non-controlling interests 953 972 980
__________ __________ __________
(171,319) 3,794 12,460
__________ __________ __________
All items recognised in comprehensive income may be reclassified
subsequently to the income statement.
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
31 March 2020
Six month period ended 31 March 2020
(Unaudited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
October
2019 7,416 279,756 2,746 457 (2,787) 70,009 (13,255) (45,133) (247) 298,962 22,803 321,765
Effect of initial
application
of IFRS 16 on 1
October
2019 - - - - - (468) - - - (468) - (468)
Revised balance
as
at 1 October
2019 7,416 279,756 2,746 457 (2,787) 69,541 (13,255) (45,133) (247) 298,494 22,803 321,297
(Loss)/profit for
the
period - - - - - (169,175) - - - (169,175) 953 (168,222)
Currency
translation
movement on
net
investment
in subsidiary
undertakings - - - - - - - (2,869) - (2,869) - (2,869)
Movement in
fair value
of cash flow
hedges - - - - - - - - (332) (332) - (332)
Fair value of
cash
flow hedges
released
to the
Consolidated
Income Statement - - - - - - - - 42 42 - 42
Tax relating
to components
of
comprehensive
income - - - - - - - - 62 62 - 62
Total
comprehensive
income for the
six
months to
31 March 2020 - - - - - (169,175) - (2,869) (228) (172,272) 953 (171,319)
Dividends
(Note 5) - - - - - (13,030) - - - (13,030) (34) (13,064)
Exercise of
share
options - - - - - - - - - - - -
Share-based
payments - - - - - 236 - - - 236 - 236
Issue of
shares -
subscription 146 11,283 - - - - - - - 11,429 - 11,429
Issue of
shares -
share
placement 596 51,838 - - - - - - - 52,434 - 52,434
Share issue
costs - (2,426) - - - - - - - (2,426) - (2,426)
Capital
reduction - (279,756) - - - 279,756 - - - - - -
Disposal of - - - - - - -
subsidiary - - - - -
Balance as at 31
March
2020 8,158 60,695 2,746 457 (2,787) 167,328 (13,255) (48,002) (475) 174,865 23,722 198,587
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
Six month period ended 31 March 2019
(Unaudited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
October
2018 7,416 279,756 2,746 457 (2,794) 80,800 (13,255) (53,073) (1,018) 301,035 23,847 324,882
(Loss)/profit for
the
period - - - - - (576) - - - (576) 972 396
Currency
translation
movement on
net
investment
in subsidiary
undertakings - - - - - - - 2,977 - 2,977 - 2,977
Movement in
fair value
of cash flow
hedges - - - - - - - - 351 351 - 351
Fair value of
cash
flow hedges
released
to the
Consolidated
Income Statement - - - - - - - - 142 142 - 142
Tax relating
to components
of
comprehensive
income - - - - - - - - (72) (72) - (72)
Total
comprehensive
income for the
six
months to
31 March 2019 - - - - - (576) - 2,977 421 2,822 972 3,794
Dividends - - - - - (7,393) - - - (7,393) (1,393) (8,786)
Exercise of
share
options - - - - - (8) - - - (8) - (8)
Share-based
payments - - - - - 250 - - - 250 - 250
Issue of
shares - - - - - - - - - - - -
Tax debited to
equity - - - - - - - - - - - -
Disposal of
subsidiary - - - - - - - 379 - 379 (47) 332
7,416 279,756 2,746 457 (2,794) 73,073 (13,255) (49,717) (597) 297,085 23,379 320,464
Balance as at 31
March
2019
======== ======== ========= =========== ======== ========= ========= ============ ======== ======== ============ ========
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
Year ended 30 September 2019 (Audited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
October
2018 7,416 279,756 2,746 457 (2,794) 80,800 (13,255) (53,073) (1,018) 301,035 23,847 324,882
(Loss)/profit
for
the period - - - - - 3,148 - - - 3,148 980 4,128
Currency
translation
movement on
net
investment
in subsidiary
undertakings - - - - - - - 7,561 - 7,561 - 7,561
Movement in
fair value
of cash flow
hedges - - - - - - - - 269 269 - 269
Fair value of
cash
flow hedges
released
to the income
statement - - - - - - - - 655 655 - 655
Tax relating
to components
of
comprehensive
income - - - - - - - - (153) (153) - (153)
Total
comprehensive
income for the
year
ended 30
September
2019 - - - - - 3,148 - 7,561 771 11,480 980 12,460
Dividends - - - - - (14,043) - - - (14,043) (1,978) (16,021)
Exercise of
share
options - - - - 7 (8) - - - (1) - (1)
Share-based
payments - - - - - 112 - - - 112 - 112
Issue of
shares - - - - - - - - - - - -
Tax debited to
equity - - - - - - - - - - - -
Disposal of
subsidiary - - - - - - - 379 - 379 (46) 333
Balance as at 30
September
2019 7,416 279,756 2,746 457 (2,787) 70,009 (13,255) (45,133) (247) 298,962 22,803 321,765
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Statement of Financial Position
31 March 2020
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
Notes GBP000 GBP000 GBP000
Non-current assets
Goodwill 8 147,631 209,674 209,970
Other intangible assets 9 280,940 282,077 270,608
Property, plant and equipment 10 20,438 4,913 5,167
Interests in associates and joint ventures 11 45,949 47,553 43,374
Investments 1,047 500 -
Venue advances and other loans - 765 500
Deferred consideration receivable - 3,457 3,795
Deferred tax asset 4,393 9,498 8,547
___________ ___________ ___________
500,398 558,437 541,961
Current assets
Trade and other receivables 12 59,637 62,983 59,024
Tax prepayment 3,413 2,367 3,300
Derivative financial instruments 15 - 23 -
Cash and cash equivalents 89,947 32,884 33,027
___________ ___________ ___________
152,997 98,257 95,351
Total assets 653,395 656,694 637,312
Current liabilities
Bank loans (17,500) - (17,500)
Trade and other payables 13 (43,175) (40,306) (33,390)
Current tax liabilities (698) (2,822) (1,929)
Deferred income (103,051) (92,963) (79,701)
Derivative financial instruments 15 (8,455) (11,342) (12,955)
Provisions (304) (312) (306)
___________ ___________ ___________
(173,183) (147,745) (145,781)
Non-current liabilities
Bank loans 14 (229,679) (141,833) (127,205)
Provisions (1,534) (1,572) (1,505)
Deferred income (338) (419) (291)
Lease liabilities (16,400) - -
Deferred tax liabilities (33,229) (44,457) (40,655)
Derivative financial instruments 15 (445) (204) (110)
___________ ___________ ___________
(281,625) (188,485) (169,766)
Total liabilities (454,808) (336,230) (315,547)
___________ ___________ ___________
Net assets 198,587 320,464 321,765
___________ ___________ ___________
Equity
Share capital 16 8,158 7,416 7,416
Share premium account 60,695 279,756 279,756
Merger reserve 2,746 2,746 2,746
Capital redemption reserve 457 457 457
ESOT reserve (2,787) (2,794) (2,787)
Retained earnings 167,328 73,073 70,009
Put option reserve (13,255) (13,255) (13,255)
Translation reserve (48,002) (49,717) (45,133)
Hedge reserve (475) (597) (247)
___________ ___________ ___________
Equity attributable to equity holders of the parent 174,865 297,085 298,962
Non-controlling interest 23,722 23,379 22,803
___________ ___________ ___________
Total equity 198,587 320,464 321,765
___________ ___________ ___________
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2020
Six months Six months Year ended
to 31 March to 31 March 30 September
2020 2019 2019
Notes Unaudited Unaudited Audited
GBP000 GBP000 GBP000
---------------------------------------------------------------- ------ ------------- ------------- --------------
Operating activities
Operating profit/(loss) from continuing operations (168,373) 4,025 14,172
Adjustments for non-cash items:
Depreciation and amortisation 9,10 16,971 13,530 27,032
Impairment of assets 3 166,849 - -
Share-based payments 250 285 63
(Decrease)/increase in provisions (53) (1,185) (1,278)
Loss/(profit) on disposal of plant, property and equipment and
computer software (14) - 10
Loss on disposal of investments 3 5,616 2,425 3,154
Fair value of cash flow hedges recognised in the income
statement 42 142 654
Share of profit from associates and joint ventures 11 (4,947) (5,534) (6,397)
Operating cash flows before movements in working capital 16,341 13,688 37,410
(Increase)/decrease in receivables (4,138) (5,493) (4,346)
Advances and prepayments to venues (1,615) (5,829) (730)
Utilisation of venue advances and prepayments 717 873 719
Increase/(decrease) in deferred income 11,315 13,295 (96)
Increase/(decrease) in payables 1,934 (518) 1,249
Operating cash flows after movements in working capital 24,554 16,016 34,206
Dividends received from associates and joint ventures 11 539 594 6,147
---------------------------------------------------------------- ------ ------------- ------------- --------------
Cash generated from operations 25,093 16,610 40,353
---------------------------------------------------------------- ------ ------------- ------------- --------------
Tax paid (2,179) (6,461) (11,548)
Net cash from operating activities 22,914 10,149 28,805
Investing activities
Interest received 406 325 1,019
Investment in associates and joint ventures and other
investments (547) (500) (500)
Acquisition of businesses - cash paid net of cash acquired 7 (97,924) (22,759) (31,478)
Purchase of property, plant and equipment and computer software (1,189) (2,097) (3,776)
Disposal of plant, property and equipment and computer software 23 - 70
Disposal of subsidiaries - cash received net of cash disposed - (492) (462)
Settlement of deferred consideration receivable 12 567 - -
Net cash flows from investing activities (98,664) (25,523) (35,127)
---------------------------------------------------------------- ------ ------------- ------------- --------------
Financing activities
Equity dividends paid (13,006) (7,411) (14,077)
Dividends paid to non-controlling interests (34) (1,393) (1,978)
Interest paid and bank charges (4,044) (2,872) (6,374)
Principal paid on lease liabilities (1,941) - -
Proceeds from the issue of share capital and exercise of share -
options 52,434 -
Fees relating to share placing (2,426) - -
Drawdown of borrowings 148,832 124,565 258,457
Repayment of borrowings (47,725) (114,438) (246,330)
Net cash flows from financing activities 132,090 (1,549) (10,302)
---------------------------------------------------------------- ------ ------------- ------------- --------------
Net (decrease)/increase in cash and cash equivalents 56,340 (16,923) (16,624)
Cash and cash equivalents at beginning of period 33,027 49,649 49,649
Effect of foreign exchange rates on cash and cash equivalents 580 158 2
Cash and cash equivalents classified as held for sale - - -
---------------------------------------------------------------- ------ ------------- ------------- --------------
Cash and cash equivalents at end of period 89,947 32,884 33,027
---------------------------------------------------------------- ------ ------------- ------------- --------------
Notes 1 to 19 form an integral part of the condensed
consolidated financial statements.
Notes to the Interim Financial Statements
1. General Information and basis of preparation
The information for the year ended 30 September 2019 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The former
auditor, Deloitte LLP, reported on those accounts: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The annual financial statements of Hyve Group plc are prepared
in accordance with IFRS as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting, as adopted by
the European Union.
The condensed consolidated financial statements have been
reviewed by BDO LLP but have not been audited. They do not include
all the information and disclosures required in the annual
financial statements, and therefore should be read in conjunction
with the Group's consolidated financial statements for the year
ended 30 September 2019.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Interim Management Report. The financial
position of the Group, its cash flows and liquidity position are
described in the interim financial statements and notes. The Group
has the financial resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the
date of this report.
The Group is dependent on the ability to be permitted to run
events attended by a significant number of people and is therefore
exposed to restrictions imposed as a result of communicable
diseases, particularly where government, local authority or
corporate restrictions are in place that either prohibit mass
gatherings or restrict travel to and from events. The Group
operates in territories that can be unpredictable and unexpected
geopolitical and economic events such as terrorism, sanctions,
currency controls and exchange rate movements can have an impact on
the Group's reported trading performance. Given the Group's
reliance on its relationships with venue owners to continue to
operate its events, the unavailability of a venue at short notice,
damage to a venue or a dispute with a venue owner could negatively
affect the Group. A significant deterioration in trading from the
major markets (notably Global Brands, Russia and/or the UK) could
also adversely impact the Group's results.
On 7 May 2020, subsequent to the balance sheet date, the Group
announced an underwritten rights issue to raise gross proceeds of
GBP126.6m, with an additional GBP35m of liquidity obtained through
the deferral of scheduled term loan repayments of GBP17.5m each in
November 2020 and November 2021 until December 2023. Covenant
waivers for the leverage ratio and interest cover covenants have
also been obtained up to and including March 2022. As a
consequence, following completion of the rights issue, the
Directors believe that the Group is now well placed to manage its
business risks successfully. The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, the Group
continues to adopt the going concern basis in preparing the interim
report and financial statements.
Accounting policies
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 201 9 annual financial statements, except for those that
relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 January 2019, which have
been adopted in these interim financial statements and will be
adopted in the 20 20 annual financial statements. New standards
impacting the Group that will be adopted in the annual financial
statements for the year ended 3 0 September 20 20 , and which have
given rise to changes in the Group's accounting policies are:
-- IFRS 16 Leases
Details of the impact th is standard ha s had are given below.
Other new and amended standards and Interpretations issued by the
IASB that will apply for the first time in the next annual
financial statements are not expected to impact the Group as they
are either not relevant to the Group's activities or require
accounting which is consistent with the Group's current accounting policies.
IFRS 16 Leases
Effective 1 January 2019, IFRS 16 has replaced IAS 17 Leases and
IFRIC 4 Determining whether an Arrangement Contains a Lease . IFRS
16 provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, together with
options to exclude leases where the lease term is 12 months or
less, or where the underlying asset is of low value. IFRS 16
substantially carries forward the lessor accounting in IAS 17, with
the distinction between operating leases and finance leases being
retained. The Group does not have significant leasing activities
acting as a lessor.
(a) Transition Method and Practical Expedients Utilised
The Group adopted IFRS 16 using the modified retrospective
approach, with recognition of transitional adjustments on the date
of initial application (1 October 2019), without restatement of
comparative figures. The Group elected to apply the practical
expedient to not reassess whether a contract is or contains a lease
at the date of initial application. Contracts entered into before
the transition date that were not identified as leases under IAS 17
and IFRIC 4 were not reassessed. The definition of a lease under
IFRS 16 was applied
only to contracts entered into or changed on or after 1 October 2019.
IFRS 16 provides for certain optional practical expedients,
including those related to the initial adoption of the standard.
The Group applied the following practical expedients when applying
IFRS 16 to leases previously classified as operating leases under
IAS 17:
-- Apply a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- Applied the exemption not to recognise right-of-use assets
and liabilities for leases with less than 12 months of lease
term remaining as of the date of initial application.
As a lessee, the Group previously classified leases as operating
or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of
ownership. Under IFRS 16, the Group recognizes right-of-use assets
and lease liabilities for most leases. However, the Group has
elected not to recognise right-of-use assets and lease liabilities
for some leases of low value assets based on the value
of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
The treatment of venue leases is expected to remain unchanged,
due to the cumulative tenancy dates over the term of each venue
lease being less than 12 months. All current venue contracts are
therefore treated as short term leases and excluded from the
assessment under the related practical expedient.
On adoption of IFRS 16, the Group recognised right-of-use assets
and lease liabilities primarily in relation to leases of office
space, which had previously been classified as operating leases.
The lease liabilities were measured at the present value of the
remaining lease payments, discounted using an incremental borrowing
rate as at 1 October 2019. Incremental borrowing rates were
calculated for each of the Group's material leases, representing
the rate at which a similar borrowing could be obtained from an
independent creditor under comparable terms and conditions in the
region where the lease is situated. Incremental borrowing rates
were calculated for the United Kingdom, Russia and United States.
The weighted-average rate applied was 3.4%.
The right-of-use assets were measured as follows:
a. Office space: Right-of-use assets are measured at an amount
equal to the lease liability, adjusted by the amount of
any prepaid or accrued lease payments.
b. All other leases: the carrying value that would have resulted
from IFRS 16 being applied from the commencement date of
the leases, subject to the practical expedients noted above.
The following table presents the impact of adopting IFRS 16 on
the statement of financial position as at 1 October 2019 :
GBP'000
Right of use assets recognised 15,685
Lease liabilities recognised (17,038)
Other adjustments to statement of financial position on transition:
Provisions 1,063
Accrued expenses 73
Prepayments (518)
Deferred tax asset 267
Net reduction in retained earnings 468
Included in profit or loss for the period is GBP1.5m of
depreciation of right-of-use assets and GBP0.3m of finance expense
on lease liabilities. Short-term and low-value leases included in
profit or loss for the period were GBP0.3m.
The following table reconciles the minimum lease commitments
disclosed in the Group's 3 0 September 2019 annual financial
statements to the amount of lease liabilities recognised on 1
October 2019:
Venues
Land and buildings GBP'000 GBP'000
Minimum operating lease commitment at 30 September 2019 17,345 99,056
Short-term leases not recognised under IFRS 16 (265) (99,056)
Low value leases not recognised under IFRS 16 (5) -
Other adjustments to the statement of financial position 617 -
Lease payments previously excluded 1,406
Undiscounted lease payments 19,098 -
Effect of discounting (2,060) -
Lease liabilities 17,038 -
Other adjustments to the statement of financial position
consists of lease provisions, prepayments and accrued expenses.
Certain lease payments previously excluded from the disclosure
of minimum operating lease commitments at 30 September 2019 have
now been included on adoption of IFRS 16, primarily due to the
existence of renewal options and autorenewal mechanisms which means
these contracts in substance have lease terms greater than 12
months.
(b) Significant Accounting Policies subsequent to Transition
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a term of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lesso r over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the group's incremental borrowing rate
on commencement of the lease is used. Variable lease payments are
only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease
payments
are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value
guarantee;
-- the exercise price of any purchase option granted in favour
of the group if it is reasonably certain to assess that
option;
-- any penalties payable for terminating the lease, if the
term of the lease has been estimated on the basis of termination
option being exercised
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- lease payments made at or before commencement of the lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the
leased asset.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term. Lease
liabilities are remeasured when there is a change in future lease
payments arising from a change in an index or rate or when there is
a change in the assessment of the term of any lease.
Use of estimates and judgements
There have been no material revisions to the nature and amount
of estimates of amounts reported in prior periods except where the
implementation of IFRS 16 discussed above requires a different
approach to the accounting previously applied. Significant
estimates and judgements that have been required for the
implementation of th is new standard are:
-- The determination of whether an arrangement contains a lease:
-- The determination of lease term for some lease contracts
in which the Group is a lessee that include renewal options
and termination options, and the determination whether the
Group is reasonably certain to exercise such option; and
-- The determination of the incremental borrowing rate used
to measure lease liabilities
Liabilities of GBP1.0m were recognised at transition in relation
to leases with some form of renewal option or autorenewal mechanism
in the lease contracts which the Group is reasonably certain will
be exercised.
The measurement of the lease liabilities on transition is most
sensitive to the incremental borrowing rates used. The Group has
conducted a sensitivity analysis taking into consideration the
impact of a change in the incremental borrowing rates.
A 1% increase across the incremental borrowing rates used in
measuring the lease liabilities would decrease those lease
liabilities on transition by GBP0.5m (3%). A 1% decrease across the
incremental borrowing rates used in measuring the lease liabilities
would increase those lease liabilities on transition by GBP0.6m
(3%).
Impact of accounting standards to be applied in future
periods
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective for periods beginning subsequent to 3 0 September 20
20 (the date on which the company's next annual financial
statements will be prepared up to) that the Group has decided not
to adopt early. The Group does not believe these standards and
interpretations will have a material impact on the financial
statements once adopted.
2 . Segmental information
The Group has identified reportable segments based on financial
information used by the Executive Team in allocating resources and
making strategic decisions. The Executive Team (consisting of the
Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer and Chief People Officer), are considered to be the Group's
Chief Operating Decision Maker. The Group evaluates performance on
the basis of headline profit or loss before tax.
The Group's reportable segments are operational business units
and groups of events that are managed separately, either based on
geographic location or as portfolios of events.
The products and services offered by each business unit are
identical across the Group. The revenue and headline profit before
tax are attributable to the Group's one principal activity, the
organisation of trade exhibitions, conferences and related
activities and can be analysed by operating segment as follows:
Six months to 31 March Eastern
2020 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 30,946 11,979 5,708 2,902 20,047 24,681 96,263
Segment headline profit
before tax 11,769 9,246 367 (810) 5,636 4,823 31,031
Unallocated items (11,197)
Headline profit before
tax 19,834
Adjusting items (note 3) (188,176)
Loss before tax (168,342)
Tax 120
Loss after tax (168,222)
The revenue in the period of GBP96.3m includes GBP1. 0m (six
months to 31 March 2019: GBP1.1m; year ended 30 September 2019:
GBP3.3m) of barter sales. No individual customer amounts to more
than 10% of Group revenues.
Unallocated items include:
-- other income;
-- head office costs;
-- foreign exchange gains and losses on translation of monetary
assets and liabilities held in Group subsidiary companies
that are denominated in currencies other than the functional
currency of the subsidiaries; and
-- net finance costs.
The impairment and derecognition charges recognised in respect
of goodwill, intangible assets, investments in associates and joint
ventures, and other assets can be analysed by operating segment as
follows:
Six months Six months Year ended
to 31 March to 31 March 30 September
2020 2019 2019
GBP000 GBP000 GBP000
Central Asia 596 - -
Asia 771 - -
Global Brands 57,216 - -
UK 108,266 - -
166,849 - -
The Group's share of profits from associates and joint ventures,
capital expenditure and amortisation and depreciation can be
analysed by operating segment as follows:
Six months to 31 March Eastern
2020 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of
associates and joint
ventures
Share of results before
tax - 6,635 - - (167) - 6,468
Tax - (1,554) - - 33 - (1,521)
Share of results after
tax - 5,081 - - (134) - 4,947
Capital expenditure
Segment capital expenditure 32 3 32 13 79 - 159
Unallocated capital
expenditure 1,030
1,189
Depreciation and amortisation
Segment depreciation
and amortisation 8,539 1,922 116 1,043 431 3,199 15,250
Unallocated depreciation
and amortisation 1,721
16,971
The Group's assets and liabilities can be analysed by operating
segment as follows:
Eastern
As at 31 March 2020 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 317,159 104,610 15,904 17,140 55,420 69,689 579,922
Unallocated assets 73,473
Total assets 653,395
Liabilities
Segment liabilities (22,047) (33,129) (10,629) (8,977) (38,589) (10,970) (124,341)
Unallocated liabilities (330,467)
Total liabilities (454,808)
Net assets 198,587
Six months to 31 March Eastern
2019 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 31,667 12,381 6,667 3,717 24,118 29,243 107,793
Segment headline profit
before tax 13,423 9,459 698 (13) 7,993 8,657 40,217
Unallocated items (15,682)
Headline profit before
tax 24,535
Adjusting items (note 3) (22,680)
Profit before tax 1,855
Tax (1,459)
Loss after tax 396
Six months to 31 March Eastern
2019 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of associates
and joint ventures
Share of results before
tax - 7,410 - - (146) - 7,264
Tax - (1,759) - - 29 - (1,730)
Share of results after
tax - 5,651 - - (117) - 5,534
Capital expenditure
Segment capital expenditure 8 170 72 128 160 - 538
Unallocated capital expenditure 1,559
2,097
Depreciation and amortisation
Segment depreciation and
amortisation 6,273 1,826 40 1,128 134 3,039 12,440
Unallocated depreciation
and amortisation 1,090
13,530
Eastern
As at 31 March 2019 Global Central & Southern Total
Unaudited Brands Asia Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 244,441 106,760 11,973 19,178 36,918 198,245 617,515
Unallocated assets 39,179
Total assets 656,694
Liabilities
Segment liabilities (34,187) (48,363) (5,456) (8,656) (26,852) (33,963) (157,477)
Unallocated liabilities (178,753)
Total liabilities (336,230)
Net assets 320,464
Total
Year ended 30 September 2019 Global Brands Asia Central Asia Eastern & Southern Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 49,708 23,157 19,816 16,721 62,643 48,678 220,723
Segment headline profit
before tax 20,258 9,382 4,980 5,849 25,902 15,509 81,880
Unallocated costs (31,472)
Headline profit before tax 50,408
Adjusting items (41,695)
Profit before tax 8,713
Tax (4,585)
Profit after tax 4,128
Total
Year ended 30 September 2019 Global Brands Asia Central Asia Eastern & Southern Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of
associates and joint
ventures
Share of results before tax - 6,642 - - 1,655 - 8,297
Tax - (1,571) - - (329) - (1,900)
Share of results after tax - 5,071 - - 1,326 - 6,397
Capital expenditure
Segment capital expenditure - 298 98 235 687 - 1,318
Unallocated capital
expenditure 2,458
3,776
Depreciation and
amortisation
Segment depreciation and
amortisation 12,560 3,657 53 2,224 413 6,038 24,945
Unallocated depreciation and
amortisation 2,087
27,032
The Group's assets and liabilities can be analysed by operating
segment as follows:
Eastern & Southern Total
30 September 2019 Global Brands Asia Central Asia Europe Russia UK Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 250,521 106,657 13,130 15,295 54,177 184,343 624,123
Unallocated assets 13,189
637,312
Liabilities
Segment liabilities (27,673) (42,583) (6,887) (4,702) (31,682) (13,415) (126,942)
Unallocated liabilities (188,605)
(315,547)
Net assets 321,765
Geographical information
Information about the Group's revenue by origin of sale and
non-current assets by geographical location are detailed below:
Revenue Non-current assets*
Six months Six months Year ended Six months Six months Year ended
to 31 to 31 30 September to 31 to 31 30 September
March March 2019 March March 2019
2020 2019 2020 2019
Unaudited Unaudited Audited Unaudited Unaudited Audited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Asia 11,850 13,137 24,882 83,009 87,407 81,383
Central Asia 3,113 3,906 11,595 3,675 4,691 4,097
Eastern &
Southern Europe 2,608 2,936 13,810 8,967 10,212 9,578
Russia 15,575 16,192 40,842 19,053 21,532 23,904
UK 35,977 43,908 70,746 116,036 284,159 279,902
Rest of the
World 27,140 27,714 58,848 265,265 140,938 134,550
_______ _______ _______ _______ _______ _______
Total 96,263 107,793 220,723 496,005 548,939 533,414
________ ________ ________ ________ ________ ________
* Non-current assets exclude deferred tax assets.
3. Adjusting items
The following (charges)/credits have been presented as adjusting
items:
Six months to Six months to
31 March 2020 31 March 2019 Year ended 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Operating items
Amortisation of acquired intangible assets (14,023) (12,026) (24,066)
Impairment of goodwill (124,032) - -
Impairment of intangible assets (42,046) - -
Impairment of investment in associates and JVs (771) - -
Loss on disposal of investments (5,616) (2,425) (3,154)
Transaction costs on acquisitions and disposals (2,592) (1,400) (1,462)
Integration costs
* Integration costs (694) (2,513) (5,322)
* Costs to realise synergies - (914) (1,469)
Restructuring costs
* TAG (878) (1,654) (2,783)
* Other - (395) (1,435)
Tax on income from associates and joint ventures (1,521) (1,730) (1,900)
Financing items
(Gain)/loss on revaluation of equity option liabilities 4,526 (246) (1,121)
Imputed interest charge on discounted equity option
liabilities - (21) (231)
(Gain)/loss on revaluation of deferred consideration
payable 69 6 245
Imputed interest income on discounted deferred
consideration receivable 865 439 1,090
(Gain)/loss on revaluation of deferred consideration
receivable (110) 199 (87)
Write off of previously capitalised debt issue costs on
refinancing (1,353) - -
___________ ___________ ___________
(188,176) (22,680) (41,695)
Please refer to the Financial Performance section of this report
for explanations provided on adjusting items.
4. Tax on profit/(loss) on ordinary activities
Six months to Six months to
31 March 2020 31 March 2019 Year ended 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Current tax
UK corporation tax - 553 (1,363)
Foreign tax 835 2,839 8,156
835 3,392 6,793
Deferred tax (955) (1,933) (2,208)
__________ __________ __________
Tax (credit)/charge on profit on ordinary activities (120) 1,459 4,585
__________ __________ __________
Tax for the interim period is charged on pre-tax profits,
including those of associates and joint ventures, at a blended rate
representing the best estimate of the weighted average annual
corporation tax expected for the financial year adjusted for
discrete items in the interim period. The effective tax rate on
headline profit before tax is 16% (2019: 27%) and in relation to
the statutory loss before tax for the period is 0% (2019: 79%). The
tax on adjusting items consists of a credit of GBP9.3m relating to
the adjusting items set out in note 3 and a charge of GBP6.1m in
relation to a reduction in deferred tax assets recognised in
connection with carried forwards tax losses.
5. Dividends
Six months to Six months to Year ended
31 March 2020 31 March 2019 30 September 2019
Unaudited Unaudited Audited
Per Settled in Settled in Per Settled in Settled in Per Settled in Settled in
share cash scrip share cash scrip share cash scrip
p GBP000 GBP000 p GBP000 GBP000 p GBP000 GBP000
Amounts
recognised as
distributions
to equity
holders in the
period:
Final dividend
in respect of
the year
ended 30
September
2019 1.6 13,030 - - - - - - -
Interim
dividend in
respect of
the year
ended 30
September
2019 - - - - - - 0.9 6,652 -
Final dividend
in respect of
the year
ended 30
September
2018 - - - 1.0 7,393 - 1.0 7,391 -
1.6 13,030 - 1.0 7,393 - 1.9 14,043 -
The Directors have not proposed an interim dividend for the year
ending 30 September 2020.
6. Earnings per share
The calculation of basic, diluted and headline diluted earnings
per share is based on the following earnings and numbers of
shares:
Six months to
Six months to 31 March 2019 Year ended 30 September 2019
31 March 2020 Unaudited Unaudited Audited
Number of shares ('000) Number of shares ('000) Number of shares ('000)
Weighted average number of
shares:
For basic earnings per share 781,265 739,784 739,114
Dilutive effect of exercise of
share options 543 445 232
________ ________ ________
For diluted earnings per share 781,808 740,229 739,346
Basic and diluted earnings per share
The calculations of basic and diluted earnings per share are
based on the loss for the financial year attributable to equity
holders of the parent of GBP169.2m (31 March 2019: GBP0.6m; 30
September 2019: profit of GBP3.1m). Basic and diluted earnings per
share were (21.7)p and (21.6)p respectively (31 March 2019: (0.1)p
and (0.1)p respectively; 30 September 2019: 0.4p and 0.4p
respectively). 543,000 share options (31 March 2019: 445,000; 30
September 2019: 232,000) were excluded from the weighted average
number of ordinary shares used in the calculation of the diluted
earnings per share because their effect would have been
antidilutive.
Headline earnings per share
The calculations of headline basic and diluted earnings per
share are based on the headline profit for the financial year
attributable to equity holders of the parent of GBP15.8m (31 March
2019: GBP17.1m; 30 September 2019: GBP36.3m). Headline basic and
diluted earnings per share were 2.0p and 2.0p respectively (31
March 2019: 2.3p and 2.3p respectively; 30 September 2019: 4.9p and
4.9p respectively).
7. Acquisitions
On 18 December 2019 the Group acquired 100% of the share capital
of Shoptalk Commerce LLC ("Shoptalk") and Groceryshop LLC
("Groceryshop"), two US-based market-leading e-commerce events
focused on change and innovation of the retail and grocery
industries, for a total consideration of GBP110.1m. The
consideration of GBP110.1m was settled GBP97.9m in cash, net of
cash acquired, and GBP11.4m by forgiveness of a liability on the
placement of shares with the vendors.
During the period the Group incurred transaction costs on the
acquisition of GBP2.2m, which are included within administrative
expenses.
The amounts to be recognised in respect of the identifiable
assets acquired and liabilities assumed are presented as
follows:
Fair value
GBP000
Intangible assets - Trademarks 49,792
Intangible assets - Customer relationships 9,208
Intangible assets - Perpetual technology license 4,070
Property, plant and equipment 222
Property, plant and equipment - Right of use asset 1,552
Cash 745
Trade receivables 4,544
Deferred tax asset 2,070
Accrued expenses (3,425)
Other payables (545)
Lease liabilities (4,935)
Deferred income (14,816)
Provisions (1,067)
Identifiable net assets 47,415
Goodwill arising on acquisition 62,683
Total consideration 110,098
Satisfied by
Cash consideration 110,098
110,098
Net cash outflow arising on acquisition
Cash consideration paid or payable 110,098
Cash and cash equivalents acquired (745)
Cash liability forgiven on placement of shares (11,429)
97,924
The goodwill of GBP62.7m arising from the acquisition reflects
the acquisition of two market-leading events, including the
expectation of new contracts and relationships and the potential
for growth from spin-off events such as Shoptalk Europe. GBP47.6m
of the goodwill recognised is expected to be deductible for tax
purposes. The fair value of trade and other receivables includes
trade receivables with a fair value, after providing for expected
uncollectable amounts, of GBP0.03m. No further amounts are
currently expected to be uncollectable.
The values used in accounting for the identifiable assets and
liabilities of these acquisitions are provisional at the balance
sheet date. If necessary, adjustments will be made to these
carrying values and the related goodwill, within 12 months of the
acquisition date.
The acquired business has contributed GBPnil to Group revenue
following the postponement of the Shoptalk US event originally due
to take place in March, whilst costs in relation to the acquired
businesses increased the Group's statutory loss before tax by
GBP2.8m. Had the acquisition occurred on 1 October 2019, the
acquired businesses would have contributed GBPnil to Group revenue
and increased the Group's statutory loss before tax by GBP3.4m.
8. Goodwill
Total
Unaudited
GBP000
Cost
At 1 October 2019 253,059
Additions through business combinations (Note 7) 62,683
Foreign exchange (4,019)
At 31 March 2020 311,723
Provision for Impairment
At 1 October 2019 (43,089)
Impairment of goodwill (124,032)
Foreign exchange 3,029
At 31 March 2020 (164,092)
Net book value
At 31 March 2020 147,631
At 30 September 2019 209,970
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired. The recoverable amounts of the CGUs are determined from
value in use calculations. The key assumptions for the value in use
calculations are those regarding operating profit growth rates
within the Group's cash flow forecasts, along with the long-term
growth rates and discount rates applied to the forecast cash
flows.
The large-scale event postponement plan implemented by the
Group, following restrictions put in place by governments across
our markets in response to the coronavirus outbreak, has
significantly impacted the forecast cashflows of all CGUs.
Therefore all CGUs are exhibiting indicators of impairment at 31
March 2020 and all have been assessed for impairment.
Management estimates discount rates that reflect the current
market assessments of the time value of money and risks specific to
the CGUs. There are a number of different inputs used in the
build-up of the discount rates, including inflation rates, risk
free rates, market risk premiums and industry betas, taken from a
number of independent sources including the IMF, Bloomberg and
Financial Times. The pre-tax discount rates applied to the cash
generating units are between 11% and 20%. The large variance in
discount rates applied reflects the differences in risks inherent
in the regions in which the CGUs operate.
The cash flow forecasts used in the value in calculation have
been revised to take into account the event postponements and
cancellations, as well as the impact of reduced customer demand on
both events due to take place as planned and those events now
taking place on alternative dates. This assumes that the Group's
events resume in China in August 2020 and worldwide from the end of
September 2020. The forecasts assume a total of five events run in
the second half of the financial year ending 30 September 2020 and
131 events run in the year ending 30 September 2021. The cash flow
forecasts also assume there will be a prolonged impact on trade
beyond the current financial year, with operating profit growth
rates throughout the four-year financial plans used in the
calculation being adjusted down to reflect this.
Central costs are allocated to the CGUs to the extent that they
are necessarily incurred to generate the cash inflows, and can be
directly attributed, or allocated on a reasonable and consistent
basis. Growth rates beyond the detailed plans are based on IMF
forecasts of GDP growth rates in the local markets, as the CGUs are
expected to grow in line with their relevant
underlying markets over the long term. These growth rates, of
between 1% and 7%, do not exceed the long-term growth rates for the
economies in which these businesses operate.
Individually significant CGUs
Significant Goodwill Other intangible Long term Pre-tax discount Recoverable
CGUs assets growth rates rates amount in excess
of carrying
value
31 30 31 30 31 30 31 30 September 31 30 September
March September March September March September March 2019 March 2019
2020 2019 2020 2019 2020 2019 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Global
Brands
Bett - 41.0 59.3 64.8 1.5% 1.5% 12.0% 8.7% - 15.4
CWIEME 8.1 20.5 42.1 43.4 1.2% 1.2% 11.3% 7.6% - 38.3
Shoptalk &
Groceryshop 66.7 - 64.8 - 1.7% - 11.3% - 11.2 -
UK - 70.0 56.8 98.1 1.5% 1.5% 12.0% 8.7% - 3.2
A new CGU for the acquired Shoptalk and Groceryshop events has
been recognised. The two events are managed as a single portfolio
with a single leadership team, have a number of customers who
attend both events and historically the majority of employees have
worked across both events. Therefore, strategic decisions made in
respect of the portfolio, or in respect of a single event, impact
the cash inflows of both events.
Impairment charges of GBP124.0m have been recognised in respect
of goodwill in our Bett (GBP41.0m), UK (GBP70.0m), CWIEME
(GBP12.4m) and Azerbaijan (GBP0.6m) CGUs.
In the 2019 Annual Report and Accounts the Group disclosed that
the headroom of the Bett and UK CGUs was sensitive to a reasonably
possible change in the key assumptions used in the value in use
calculation, including an increase in discount rates and a decline
in the CGUs' operating profit growth rates. As a result of the
coronavirus outbreak, discount rates have increased due to the
increased risk environment, while forecast operating profits have
declined significantly across the business in the short term,
reflecting the event postponements and cancellations. Therefore,
the forecast cash flows of these CGUs are no longer able to support
the carrying value of their assets and consequently the impairment
charges noted above have been recognised in the Bett and UK CGUs
respectively. Furthermore, the adverse impact of the outbreak on
discount rates and forecast cash flows has resulted in impairment
charges being recognised in our CWIEME and Azerbaijan CGUs as noted
above. The charges have been recognised on the assumption that no
events within the impaired CGUs will take place prior to the end of
the current financial year and that profits across the remaining
financial years in the forecast period will be at least 20% lower
than those forecast prior to the outbreak. In the event of further
event postponements and cancellations beyond the current financial
year, the subsequent adverse impact on forecast cash flows could
result in further impairments in respect of these CGUs.
Sensitivity to changes in assumptions
The calculation of value in use is most sensitive to the
discount rates, growth rates and forecast cash flows used. The
Group has conducted a sensitivity analysis taking into
consideration the impact on these assumptions arising from a range
of reasonably possible trading and economic scenarios, including
additional adverse impact from the coronavirus outbreak. The
scenarios have been performed separately, and in aggregate, for
each CGU with a recoverable value in excess of its carrying value,
with the sensitivities summarised as follows:
-- An increase in the discount rate by 1%.
-- A decrease in the long-term growth rate by 0.5%.
-- A decrease in forecast operating profits by 5%
The sensitivity analysis shows that no impairment would result
from either an increase in the discount rates, a decrease in the
long-term growth rate, or a decrease in the operating profit growth
rate, or an aggregate of these sensitivities, in any CGU other than
in Shoptalk & Groceryshop. The changes in key assumptions that
would cause the recoverable value of the Shoptalk & Groceryshop
CGU to equal its carrying value is shown below.
Sensitivity Shoptalk & Groceryshop
% change in discount rate 0.8%
% change in long term growth rate -0.8%
% change in forecast operating profits -6.1%
9. Other intangible assets
Total
Unaudited
GBP000
At 1 October 2019 270,608
Additions 800
Additions through business combinations (Note 7) 63,070
Amortisation of acquired intangible assets (14,023)
Amortisation of computer software (684)
Impairment of intangible assets (42,046)
Exchange differences 3,215
_________
At 31 March 2020 280,940
_________
Impairment charges of GBP42.0m have been recognised in respect
of intangible assets in the UK and Bett CGUs for the reasons
disclosed in Note 8.
10. Property, plant and equipment
Right of use assets GBP000 Other property, plant and Total Unaudited GBP000
equipment
GBP000
At 30 September 2019 - 5,167 5,167
Transition to IFRS 16 15,686 - 15,686
At 1 October 2019 15,686 5,167 20,853
Additions - 389 389
Additions through business
combinations (Note 7) 1,552 222 1,774
Depreciation (1,536) (728) (2,264)
Disposals - - -
Foreign exchange (97) (217) (314)
_________ _________ _________
At 31 March 2020 15,605 4,833 20,438
_________ _________ _________
11. Interests in associates and joint ventures
Total
Unaudited
GBP000
At 1 October 2019 43,374
Share of results of associates and joint ventures 4,947
Cash received (539)
Impairment of associates (771)
Foreign exchange (1,062)
_________
At 31 March 2020 45,949
_________
Impairment charges of GBP0.8m have also been recognised in
respect of our Indonesian joint venture Debindo for the reasons
disclosed in Note 8.
12. Trade and other receivables
31 March 31 March
2020 2019 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade receivables 36,442 35,194 36,009
Other receivables 9,843 7,615 3,691
Deferred consideration - - 1,671
Venue advances and prepayments 1,054 6,980 160
Prepayments and accrued income 12,298 13,194 17,493
___________ ___________ ___________
59,637 62,983 59,024
___________ ___________ ___________
The movements in deferred consideration receivable during the
year are shown in the table below:
GBP000
At 1 October 2019 5,466
Payments received (567)
Impact of unwind of discounting 852
Foreign exchange (111)
Provision (5,640)
At 31 March 2020 -
As at 30 September 2019 GBP1.7m of deferred consideration
receivable was included in current assets and GBP3.8m was included
in non-current assets.
The provision for the remaining deferred consideration
receivable relates to the disposal of ITE Expo LLC, the operating
company for 56 of the Group's non-core, regionally-focused, smaller
events in Russia, to Schtab-Expo LLC, which was completed in
October 2018. The coronavirus outbreak has had a significant impact
on the buyer's financial position and therefore there is a greater
risk over the recoverability of the receivable which has been fully
provided for. The impact of the provision is included in loss on
disposal of investments.
13. Trade and other payables
31 March 31 March
2020 2019 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade payables 7,190 6,880 4,823
Taxation and social security 1,201 1,426 2,057
Lease liabilities 3,988 - -
Other payables 14,086 5,011 6,416
Accruals 15,813 17,439 19,128
Deferred consideration payable 897 9,550 966
___________ ___________ ___________
43,175 40,306 33,390
___________ ___________ ___________
As at 31 March 2020 GBP4.0m of lease liabilities were included
in current liabilities and GBP16.4m was included in non-current
liabilities.
14. Bank loans
In December 2019 the Group completed a refinancing of its
existing debt facilities. Total commitments increased from
GBP142.5m (GBP47.5m term loan, GBP95.0m revolver) to GBP250.0m
(GBP100.0 term loan, GBP150.0m revolver). The facilities terminate
in December 2023 with the option, subject to certain conditions, to
extend by a further year. As at the reporting date, there were
scheduled annual repayments of the term loan starting November 2020
for GBP17.5m, with further repayments every subsequent November for
GBP17.5m, GBP20.0m, GBP22.5m, and a final repayment for GBP22.5m on
the termination date. Please refer to note 19 for details on the
subsequent amendments to the facilities agreement.
Interest is charged on any utilised amount on either debt
facility at a rate of LIBOR plus a margin ranging from 1.90% to
2.90% dependent on the Group's leverage ratio under the agreement.
The debt facilities are secured by asset pledges and debentures
given by a number of Group companies.
Total drawdowns under the facility of GBP250.0m at 31 March 2020
were denominated in sterling (GBP242.7m) and euro (GBP7.1m). At 31
March 2020 the Group had GBPnil (31 March 2019: GBP16.3m) of
undrawn committed facilities.
All borrowings are arranged at floating interest rates, thus
exposing the Group to interest rate risk. The Group uses interest
rate swaps to mitigate this risk, hedging GBP100.0m of the debt (31
March 2019: GBP50.0m; 30 September 2019: GBP50.0m), reducing the
exposure to fluctuations in interest rates. All borrowings are
secured by a guarantee between a number of Group companies.
Fees of GBP1.3m capitalised in relation to the previous facility
have been written off in the six months to 31 March 2020.
As at 31 March 2020 there are capitalised fees of GBP2.6m in
relation to the Group's current debt facility.
15. Derivative financial instruments
Derivative financial instruments are classified according to the
following categories in the table below. The Group's derivative
financial instruments are categorised into levels to reflect the
degree to which observable inputs are used for determining their
fair value. The Group's foreign currency forward contracts and
interest rate swaps are classified as Level 2, while the equity and
put options are classified as Level 3.
31 March 2020 31 March 2019 30 September 2019
Unaudited Unaudited Audited
Notional Fair value Notional Fair value Notional Fair value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Current assets
Foreign currency forward contracts - - 1,928 23 - -
- - 1,928 23 - -
Current liabilities
Interest rate swaps - - - - - -
Equity options 8,601 8,455 14,034 11,342 14,937 12,955
8,601 8,455 14,034 11,342 14,937 12,955
Non-current liabilities
Equity options - - 175 152 - -
Interest rate swaps 445 445 52 52 110 110
445 445 227 204 110 110
Level 1 fair values are measured using quoted prices
(unadjusted) in active markets for identical assets or liabilities.
Level 2 fair values are measured using inputs, other than quoted
prices included within Level 1 that are observable for the asset or
liability either directly or indirectly. Level 3 fair values are
measured using inputs for the asset or liability that are not based
on observable market data.
For the Group's Level 3 equity options, these are valued based
on a multiple as contractually agreed of forecast future EBITDA for
each relevant option. The key unobservable inputs relate to the
EBITDA multiple (ranging from 8.75x to 12.5x) and forecast future
EBITDA for each entity. A movement in the forecast EBITDA results
for the relevant period could have a significant impact on the
equity option valuation.
The Group has conducted a sensitivity analysis taking into
consideration the impact of a movement in forecast EBITDA for each
equity option liability. A 10% increase in forecast EBITDA for the
relevant period would increase the value of the equity option
liabilities by GBP0.8m/10%.
The following table shows the movements in the Group's equity
option liabilities during the period:
Total
Unaudited
GBP000
At 1 October 2019 12,955
Impact of discounting -
Revaluation (4,525)
Exchange differences recognised in other comprehensive income 25
_________
At 31 March 2020 8,455
_________
The revaluation of equity option liabilities in the period
relates to the Group's option over the remaining 40% interest in
ABEC, the 2015 acquisition of the Indian exhibitions company. The
equity option liability declined in value during the period as a
result of reduced EBITDA by the ABEC business in the relevant
period for assessment.
The Group utilises foreign currency forward contracts to hedge
future euro denominated sales made from the UK. The Group is party
to foreign currency forward contracts in the management of its
exchange rate exposures. The instruments purchased are denominated
in euros which represents the Group's primary billing currency.
Under the forward contracts, the Group has an obligation to sell
euros for sterling at specified rates at specified dates.
The foreign currency forward contracts as at 31 March 2020 cover
exchange exposures over the next 15 months. These instruments have
been designated in hedging relationships, with any changes in their
fair value being recorded in equity and reclassified subsequently
to the income statement.
16. Share capital
31 March 2020 31 March 2019 30 September 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Allotted and fully-paid
815,780,256 ordinary shares of 1 penny each (31 March 2019:
741,618,456; 30 September 2019:
741,618,456) 8,158 7,416 7,416
__________ __________ __________
31 March 2020 31 March 2019 30 September 2019
Unaudited Unaudited Audited
Number of shares Number of shares Number of shares
At 1 October 741,618,456 741,618,456 741,618,456
Share placement 74,161,800 - -
At 31 March 815,780,256 741,618,456 741,618,456
__________ __________ __________
On 18 December 2019, the Group announced a fully underwritten
non pre-emptive placing of up to 59,584,541 new ordinary shares
alongside a subscription of 14,577,259 new ordinary shares by the
founders and certain other management shareholders of Shoptalk and
Groceryshop following the acquisition.
During the period, no ordinary shares of 1p each (2019: nil)
were allotted pursuant to the exercise of share options. The
Company has one class of ordinary shares which carry no right to
fixed income.
17. Net debt
At 1 October Transition to Acquired Foreign At 31 March
2019 IFRS 16 leases Cash flow Interest exchange 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash 33,027 - - 56,340 580 89,947
Debt due within
one year (17,500) - - - - (17,500)
Debt due after
one year (127,205) (102,461) (13) (229,679)
Lease
liabilities - (17,037) (4,935) 1,941 (327) (30) (20,388)
Net debt (111,678) (17,037) (4,935) (44,180) (327) 537 (177,620)
Lease
liabilities 20,388
Adjusted net
debt (157,232)
Net debt is defined as cash and cash equivalents after deducting
bank loans and lease liabilities. The Board consider net debt to be
a reliable measure of the Group's net indebtedness that provides an
indicator of the overall balance sheet strength. It is also a
single measure that can be used to assess the combined impact of
the Group's cash position and its indebtedness.
Adjusted net debt is net debt excluding lease liabilities.
Capitalised refinancing fees of GBP2.6m are included in the debt
balances disclosed above.
18. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions with key management personnel
will be disclosed in the Group's Annual Report for the year ended
30 September 2020. Transactions between the Group and its
associates, where relevant, are disclosed below.
Trading transactions with associates
During the period ended 31 March 2020 the Group charged
management fees of GBP0.1m (2019: GBP0.1m) to Sinostar ITE, the
Group's joint venture operation in Hong Kong and China.
19. Post balance sheet events
On 7 May 2020 the Group announced an underwritten rights issue
to raise gross proceeds of GBP126.6m, with full details of that
transaction set out in the separate rights issue announcement. In
addition, the Group has secured an extra GBP35m of liquidity from
its our lenders through the deferral of scheduled term loan
repayments of GBP17.5m each in November 2020 and November 2021,
until maturity in December 2023, and obtained covenant waivers
until June 2022, contingent on the rights issue.
Independent review report to Hyve Group plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 March 2020 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
changes in equity, the condensed consolidated statement of
financial position, the condensed consolidated cash flow statement
and the related notes 1 to 19.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, as adopted by the
European Union, and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
55 Baker Street, London, W1U 7EU
7 May 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Directors and professional advisers
Directors Richard Last, non-executive Chairman
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
Nicholas Backhouse, non-executive Director
Sharon Baylay, non-executive Director
Stephen Puckett, non-executive Director
Company Secretary Jared Cranney (appointed 25 November 2019)
Registered office Hyve Group plc, 2 Kingdom Street, London, W2 6JG
Registration number 01927339
Auditor BDO LLP, 55 Baker St., London, W1U 7EU
Solicitors DLA Piper UK LLP, 160 Aldersgate Street , London, EC1A 4HT
Principal Bankers Barclays Bank PLC , 1 Churchill Place, London, E14 5HP
HSBC Bank plc, 60 Queen Victoria Street, London, EC4N 4TR
Commerzbank AG, 30 Gresham St, London, ECV2 7PG
Citibank, 33 Canada Square, London, E14 5BL
Company Brokers Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London,
EC4M 7LT
Registrars Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
Public Relations FTI Consulting Limited, 200 Aldersgate Street, London, EC1A 4HD
Website www.hyve.group
Financial calendar
The Group's financial calendar can be found at
https://hyve.group/Investors/Financial-Calendar
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KKOBDPBKKDPK
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