18 May 2021

 

Hyve Group plc

("Hyve" or the "Group")

INTERIM RESULTS

 

	· Robust financial position after further insurance proceeds and ongoing cost management
	· Ran 12 in-person events in H1 despite the ongoing disruption caused by COVID-19 · Strong customer rollovers reflect pent-up demand for market leading events · Well positioned to emerge from the pandemic a stronger business with an omnichannel strategy

Mark Shashoua, CEO of Hyve Group plc, commented:

"Hyve is focused on emerging from the pandemic a stronger business, with a robust financial platform and strategy in place to meet pent-up event demand, while accelerating our omnichannel offering. Since the outbreak of COVID-19 we have secured insurance proceeds totalling £84.9m, achieved cost savings above our projections and ensured we have sufficient liquidity to make the most of the opportunity in front of us as markets begin to reopen.

 

"Having run events in Russia, Ukraine, China, Turkey and India in H1, we are optimistic that events in Western economies will run in the second half, in line with our modelled scenarios. Continued customer rollover for Western events provides confidence in the pent-up demand for market leading in-person events, which Hyve is well positioned to serve.

 

"COVID-19 has provided Hyve an opportunity to reset, renew and evolve. We are enhancing our already market leading in-person events by significantly building out our capability to deliver bespoke facilitated meetings programmes at a number of our events in FY22. Our quality-focused portfolio is optimally positioned to deliver an even greater return on time and money for our customers than before the pandemic.

 

"We continue to evolve our omnichannel strategy, enabling us to strengthen our existing brands, monetise online events and offer customers multiple opportunities to learn, network and trade throughout the year. Our recent acquisition of Retail Meetup is tracking ahead of expectations, demonstrating a successful monetisable model for future virtual Meetup events. With the speed of vaccine rollouts providing optimism and the strong liquidity headroom we have created, we enter the second half with the right talent, portfolio and omnichannel strategy to meet pent-up demand now and into FY22."

 

 

Financial headlines4	Six months to 31 March 2021	Six months to 31 March 2020
Volume sales	39,400 m2	288,900 m2
Revenue	£10.4m	£90.6m
Headline profit before tax1	£27.6m	£19.4m
Profit / (loss) before tax	£18.7m	£(168.7)m
Headline diluted earnings per share2	8.5p	10.9p
Diluted earnings per share2	5.9p	(120.2)p
Interim dividend per share	Nil	Nil
Adjusted net debt3	£92.4m	£157.2m

 

·	£10.4m revenue (2020: £90.6m) reflects multiple lockdowns across our geographies
·	Headline profit before tax £27.6m (2020: £19.4m)
·	This is after including £49.0m of insurance proceeds5 in respect of cancelled events. The income from insurance proceeds is recognised when confirmed, not in the period in which results from the cancelled events would have been recognised had they taken place.
·	Statutory profit before tax of £18.7m (2020: loss of £168.7m)
·	Adjusted net debt reduced to £92.4m (2020: £157.2m) following continued cost control, rights issue in May 2020 raising £126.6m and the receipt of insurance claims to date
·	Hyve maintains a strong liquidity position with visibility of significant cash headroom under our modelled scenarios

Strategic highlights 

·	Ran 12 in-person events in Russia, Ukraine, China, Turkey and India during H1
·	Acquired Retail Meetup in December 2020 and ran successful Groceryshop Spring Meetup event in March performing 10% ahead of expectations
·	Completed exit of Central Asia with disposal of Kazakhstan portfolio - 25 non-core, regionally focused events
·	Portfolio now consists of 75 market-leading, bigger, better events (100 pre-pandemic)
·	Successfully secured confirmation of £49.0m of insurance proceeds in the first half of the year. An additional £13.9m has been confirmed since the period end. Including £22.0m confirmed in FY20, total insurance proceeds are now £84.9m: o  £56.3m for FY20 events (policy cap: £62.0m) o  £28.6m for FY21 events (policy cap: £50.0m)

 

Accelerating omnichannel

 

·	Evolving our in-person offering via facilitated meetings
	o  Carrying out trials in FY21 to rollout facilitated meetings prior to launching at BETT, Spring Fair, Mining Indaba and Autumn Fair in FY22
·	Monetising our offering online
	o  Secured acquisition of Retail Meetup in December 2020 for initial consideration of £18.5m, with an earnout valued at £3.4m at acquisition, to accelerate omnichannel strategy
	o  A first of its kind digital networking format and technology with proven monetisation adding four high quality digital events
	o  In March 2021, the Group ran its first virtual Meetup event, Groceryshop Spring Meetup. It saw high levels of customer participation with 8,884 online meetings taking place over the three-day event, proving that online events can cater to customer needs and be monetised
·	Ran more than 80 virtual events, of varying formats, during the first half to keep our customers engaged and connected with their communities online

 

Outlook

 

·	Hyve is currently trading between the two modelled scenarios presented in December 2020, "Recovery"6 and "East/West"7
·	In either scenario, Hyve maintains its strong liquidity position and has visibility of significant cash headroom
·	Our outlook for net debt at the year end remains in the range of £100-120m, even having completed the acquisition of Retail Meetup in December
·	With restrictions remaining on international travel and lockdowns still ongoing in certain markets, disruption to the event schedule continues
·	The Group is encouraged by the pace of vaccine rollouts in countries such as the United Kingdom and United States
·	While the near-term outlook remains fluid, Hyve is cautiously optimistic as it continues to see strong pent-up demand for its market-leading events through continued strong rollover of customer deposits and sales
·	Hyve expects a gradual return of customer participation as international travel resumes and restrictions are lifted

 

1.	Headline profit before tax is defined as profit before tax from continuing operations 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 interim financial statements for details.
2.	Headline diluted earnings per share is calculated using profit attributable to shareholders from continuing operations before adjusting items - see notes 3 and 6 to the condensed consolidated financial statements for details. The weighted average number of shares used for basic and diluted and headline basic and diluted earnings per share for March 2020 has been restated as a result of the share consolidation and rights issue which took place during 2020, in order to provide a comparative measure. As a result, basic and diluted and headline basic and diluted earnings per share for March 2020 have also been restated.
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.	Results from continuing operations only. Results for the six months to 31 March 2020 and year ended 30 September 2020 have been restated throughout the Interim Results to this effect.
5.	The gross proceeds from insurance claims under the Group's cancellation insurance policies are recognised in the income statement when the receipt of the proceeds is virtually certain. Of the £49.0m recognised in the period, £34.2m is in respect of FY20 events cancelled in the prior year and £14.8m in respect of FY21 events.
6.	'Recovery' scenario is our base case and assumes that events in China, Russia, Ukraine and Turkey are able to go ahead in FY21. However, they will be smaller than in previous years with a largely domestic customer base. This scenario assumes that events in Western markets will take place during the second half.
7.	'East/West' scenario is our downside case and assumes that no Western events take place throughout the year.

 

Enquiries:

Mark Shashoua, CEO / John Gulliver, CFOO	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 bring together and connect entire sector ecosystems from all corners of the globe. We meet our customer needs to learn, network and trade via both market-leading in person and online events. Hyve Group plc is all about globally consistent best practice and unrivalled quality. 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. Hyve's market-leading portfolio of global brands include: Shoptalk, Spring Fair, MosBuild, Bett, Mining Indaba and recently acquired Retail Meetup, a ground-breaking digital platform enabling online networking and trade to take place at scale.

Where business is personal, where meetings move markets and where today's leaders inspire tomorrow's.

 

Management Report

Executive summary

2021 is a year of renewing and evolving, in preparation for a full event schedule in 2022, if restrictions allow.

 

Rewinding 14 months, we entered the COVID-19 pandemic in a strong position, having just completed our three-year Transformation and Growth programme. The centralised operating model we created as part of this transformation allowed us to respond quickly and decisively to the pandemic, and safeguard the business through conserving cash, controlling costs and increasing liquidity. A significant part of this work was claiming against our event cancellation insurance policies, which to date has secured £84.9m.

 

At the same time, we have kept in close contact with our customers, providing them with new channels of online engagement and reassuring them of the work we are doing to support the safe return of in-person events. We believe that our commitment to our customer communities has helped us to grow our customer market share, and customer support has been demonstrated by their continued rolling over of deposits to future events.

 

In the first half of the year, the Group ran 12 in-person events, taking the total number of events we have run since the outbreak of COVID-19 to 24. Those events have taken place in Russia, China, Ukraine, Turkey and India and, whilst the global situation remains fluid, the speed of vaccine rollouts in some countries does provide us with significant confidence that events in many of our other markets will now resume from FY21 as restrictions lift.

 

Our event schedule for the first half has been significantly disrupted and while domestic attendance remains high, events are running at a reduced scale given the ongoing international travel restrictions in place due to COVID-19. We know from our communication with customers that there is huge pent-up demand for our market leading in-person events. This is being demonstrated by the strong attendee numbers at the in-person events we have been able to run this year, despite ongoing restrictions on international travel, as well as the strong rollover of customer deposits when we have had to reschedule or cancel an event.

 

As events reopen, we know from experience that it will be the market leading events which will succeed and so we have continued to deliver on our strategic priority of managing our portfolio. The strategic disposal of ITECA LLC, the operating company for the 25 non-core, regionally focused events in Kazakhstan, has continued our focus on running fewer, bigger, better events.

 

Throughout the pandemic we have worked hard to actively develop our vision for a next generation events business, positioning Hyve to continue to lead the way and emerge successfully in the new normal. Our omnichannel strategy which supports in-person events with online activity continues to evolve as we explore new ways to support our customer communities. We are strengthening our in-person events by offering bespoke, tech-enabled matchmaking programmes whilst continuing to explore and develop the online experiences we offer our customers. Our acquisition of Retail Meetup, a first of its kind digital networking format for the entire ecommerce ecosystem, provides us with an exciting new customer proposition and a blueprint for future growth.

 

Through the development of this omnichannel strategy, we will be able to provide customers with a calendar of opportunities to learn, network and trade, both online and in-person, throughout the entire year, further cementing our position as a strategic partner for industries.

 

Our strong balance sheet

Significant action was taken in 2020 to create a strong financial platform and secure our future. These actions to control costs and manage cash give us confidence that we have sufficient liquidity to trade through FY21 and FY22, while markets reopen globally.

 

The work we undertook last year included a £126m rights issue, amending banking covenants and renegotiating terms with venues and suppliers. We also completed a restructuring of our business, which identified significant cost savings, and furloughed some of our UK-based employees under the UK government's Coronavirus Job Retention Scheme which we have continued to utilise, albeit on a smaller scale, in the first half of FY21. Following immediate and decisive action, we are on track to achieve targeted annualised savings of at least £44m in FY21.

 

Claims under our insurance policies have served us well and to date we have secured £56.3m for FY20 events and £28.6m for FY21 events. We continue to pursue the remaining £27.0m of insurance proceeds that would take us to our policy caps.

 

In the first half of FY21, the 12 in-person events (2020: 45 events), in addition to Groceryshop Spring Meetup, yielded revenue of £10.4m and, thanks to ongoing cost savings and the receipt of insurance proceeds in respect of cancelled events of £49.0m, we report a headline profit before tax of £27.6m (2020: £19.4m).

 

As a result of this revenue, continued tight cost control, rights issue and insurance proceeds, our adjusted net debt has reduced to £92.4m (2020: £157.2m). Looking ahead, we believe we have sufficient liquidity to trade through FY22 as markets gradually reopen.

 

The suspension of dividends remains in place and will be kept under review.

 

Our portfolio of market leading events

We have an ongoing commitment to strengthening the quality of our portfolio of events. This strategy will be beneficial as we exit the pandemic as we know that, during times of uncertainty, people gravitate towards quality. Historically, following a period of downturn and when marketing budgets are reduced, people have typically returned to only the events which deliver the highest return on investment and time.

 

Significant work has been undertaken during the first half of the year to continue to refine our portfolio. 

Financed through existing debt facilities and cash reserves, in December 2020 we acquired Retail Meetup, the ground-breaking large-scale networking platform with the potential to revolutionise online events, for an initial consideration of £18.5m. Retail Meetup adds four high quality, fully digital events to our portfolio. These events are expected to be earnings enhancing, with clear potential to scale, with highly encouraging initial customer response and strong sales performance. These four digital Meetups also serve to greatly enhance and complement the Shoptalk and Groceryshop brands which we acquired in December 2019.

 

Post the period-end, we announced the disposal of ITECA LLP, the operating company for the 25 non-core, regionally focused events in Kazakhstan. This completes our key strategic aim to exit the business in Central Asia and supports our ambition to focus on larger, international events with higher growth potential. The assets and liabilities of the Kazakhstan business have been classified as held for sale at 31 March and the Central Asia business is treated as a discontinued operation throughout the 2021 Interim Results.

 

Our more focused portfolio of market leading events now stands at 75 - a significantly smaller portfolio than previous years, but with the average revenue per event (under normal circumstances) having increased from around £0.5m in 2017 to £2.8m prior to the pandemic. Managing our portfolio is an ongoing element of our strategy and one we will continue to pursue.

 

In our last report, we set out three clear priorities for FY21 and are making positive progress to:

 

1.	Build customer market share;
2.	Prepare for the rollout of facilitated meetings from 2022 across key in-person events; and
3.	Continue to evaluate feasibility and demand for virtual networking platforms to complement our market-leading events.

Our clear vision for the future

Our business serves three fundamental customer needs: to learn, network and trade. COVID-19 has accelerated trends we were already seeing with customers looking for ever greater return on their investment and time. We have seen a significant shift in the evolution of customer behaviour and expectations. We believe that the future of servicing customer needs is omnichannel, with in-person and digital events driving engagement across the year.

 

To ensure we remain at the forefront of this change, and in the best position to service existing and new customers, we have been actively accelerating our omnichannel strategy. This means using technology to enhance our in-person events whilst also exploring and developing new ways for our customers to learn, network and trade via online formats. 

 

Facilitated meetings at in-person events

 

At our in-person events we are beginning the rollout of the facilitated meetings format we acquired along with Shoptalk and Groceryshop in December 2019. This new product offers a smart matchmaking solution, tailored entirely around an industry sector, so that our customers are able to meet with highly relevant contacts from their industry. The process starts with our sector specific community development teams curating prominent industry buyers, who are then mutually matched with vendors using a sophisticated double opt-in, algorithm-led technology which schedules high value meetings. The data we collect during this process means our exhibitors benefit from a larger audience of known decision-makers and allows us to better support our customers in achieving their goals.

 

This significantly increases the return on investment and time of our in-person events by enabling attendees to simply identify a large number of relevant networking opportunities and meet with more people in less time and with less effort expended. Facilitated meetings greatly improve the efficiency of an in-person event experience and are therefore in high demand.

 

We firmly believe that the future of in person events is to offer facilitated meetings and that by adding this capability, we will grow our market share. Under current plans, we will start the rollout to some of our key events in 2022 including Spring and Autumn Fair, Bett and Mining Indaba.

 

Online facilitated networking

 

The other key aspect of our omnichannel strategy is to continue to explore and develop new ways to connect our customers online. During the first half of the year, we ran more than 80 online events to keep customers connected to their communities. These events were delivered in a range of formats including presentations, panel discussions, product showcases and multi-day events. To date, the majority of online events have catered only for the 'learn' customer need, making them excellent for engagement but difficult to monetise.

 

The acquisition of Retail Meetup in December 2020 changes that and gives us a cornerstone for our omnichannel strategy. Retail Meetup is a first of its kind commercial proposition which brings the entire retail and grocery ecosystem together, to network and trade, on a huge scale, in an online format.

 

Prior to the acquisition, we collaborated with Retail Meetup to launch a proof of concept event called Shoptalk Meetup, which yielded incredible results with over 2,000 participants and nearly 18,000 meetings taking place online over just three days. The event enabled networking across the entire US retail ecosystem including retailers, brands, consultants, start-ups, media, investors, sell-side analysts and many others. To put it into perspective, if all 18,000 15-minute meetups were put end-to-end, it would equal 8.5 months, demonstrating the scale and potential offered by a Meetup event.

 

In March, we hosted our first monetisable online Retail Meetup event since acquiring the platform, Groceryshop Spring Meetup. Again, this event went beyond our expectations with almost 1,300 participants taking part in around 9,000 Meetups over the space of just 6 hours. This shows that online events can cater to all of our customers' needs and be monetised, while establishing a proven model for our next two Meetup events to follow.

 

Technology like Retail Meetup enables us to use online events to offer our customers something completely new. By giving our customers both online and offline options, and offering a year-round schedule of opportunities for them to learn, network and trade, we will offer unbeatable return on investment and time to our customers and significantly enhance our brands.

 

Safely reopening in-person events

We continue to be led by local guidance with regards to reopening our events. We held 12 in-person events in the first 6 months of FY21, cancelled 29 and postponed 5 to the second half of the year. There are currently 34 in-person events scheduled for the second half of FY21.

 

We know that there is significant pent-up demand for our market-leading events and that is being made clear through both attendance at events we have been able to run, as well as the strength of our rollovers. Our short-term focus is on resuming our events when it is safe to do so as markets reopen.

 

Where we are able to reopen events, we do so in accordance with local safety guidelines as well as our best in class Safe & Secure standards. These standards were developed by our dedicated global taskforce and we continue to work in collaboration with industry associations, local governments and the relevant health authorities to ensure the highest possible levels of safety for customers and colleagues.

 

Our best in class measures include frequent and enhanced cleaning and regular communication with customers and colleagues. There are a number of social distancing guidelines in place which are in line with local regulations, including contactless registration, staggered arrival times, structured journeys through the venue and larger aisles and meeting areas which have been put in place, as well as on-site temperature testing, provision of masks and visors, glass dividers and dedicated quarantine areas.

 

Investing in our people

Following a hugely disruptive 2020, a key focus is now on beginning to reinvest in our people and further develop our culture. We recognise that a strong culture will be pivotal as we lead the disruption of our industry, continue to create unmissable experiences for our customers and pave an exciting new path for Hyve.

 

During the first half we launched a new employee engagement survey tool, Peakon, which uses regular algorithm-driven surveys to produce live data and trends telling us how colleagues are feeling about life at Hyve. Topics include development, reward, culture and wellbeing. Data is reviewed at Group, divisional and team level and will be used to inform future people plans and investment as we exit the crisis and enter our recovery period, during which our people and culture will be paramount.

 

A number of new communication activities have been implemented to connect the global team, including weekly CEO videos, monthly employee feedback sessions and regular calls between all levels of the business and across all geographies.

 

Wellbeing resources have been invested in, including online therapy support for UK colleagues and a global programme of wellbeing webinars covering topics including stress, nutrition and sleep.

 

We are also in the process of enhancing our learning and development programmes with a focus on key areas such as management skills, systems and helping our people to improve their online presenting style.

 

As we look to attract and retain the best industry talent, we are also reviewing practices in areas including recognition, reward, hybrid working and office environments. 

 

We enter the second half of the year with the right team in place to deliver our market-leading in-person events and new online formats, and with a culture which is on a positive trajectory.

 

Outlook

With restrictions remaining on international travel and lockdowns still ongoing in certain markets, disruption to the event schedule continues. That said, we are greatly encouraged by the speed of vaccine rollouts in the United Kingdom and United States in particular.

 

In December we outlined two scenarios we had modelled for our planning:

 

·	The 'Recovery' scenario, which assumed that events in China, Russia, Ukraine and Turkey would be able to go ahead but they would be smaller than in previous years with a largely domestic customer base. This scenario assumed that events in western markets would take place only during the second half.
·	The 'East/West' scenario, which assumed that no western events would take place throughout the year.

We are currently operating firmly between the two scenarios with events expected to resume in the west part-way through the second half. We remain ready to pivot fully to the East/West scenario should we need to. Overall, we now have slightly fewer events scheduled to take place than modelled under both scenarios but we currently have more Top 10 events scheduled to run than under the East/West scenario, with optimism that both Autumn Fair and Groceryshop will be able to take place in September. In either scenario we maintain a strong liquidity position and have visibility of significant cash headroom. 

 

As we enter the second half, while the near-term outlook remains fluid, we are cautiously optimistic about events taking place across the majority of our markets in the second half. We continue to see strong pent-up demand for our market-leading events, and we expect a gradual return of customer participation as international travel resumes and restrictions are lifted.

 

Reset, renew, evolve

While COVID-19 has given rise to significant challenges and uncertainties for everyone it has also presented us with the opportunity to take a step back and take stock of how and where we can evolve our business.

 

We plan to focus on growing our customer market share through targeted sales, marketing activity and engaging our customer communities online. Through this support, we continue to develop our relationships with customers and encourage the pent-up demand for our in-person events.

 

The work we are doing to add value to our already unmissable in-person events, through deploying our digital facilitated meetings software, will add further value and provide a boost to return on investment and time for customers.

 

Meanwhile, the continued evolution of our omnichannel strategy will futureproof our business and ensure we are able to satisfy the needs of our customers, in a variety of formats, and at multiple touchpoints throughout the year. 

 

We believe that the strength of our balance sheet, our portfolio of market-leading events and our exciting vision for a more tech-enabled future will pave the way for a strong recovery and see Hyve reach new levels of success post-pandemic.

 

Financial performance

Statutory results

 

Revenues for the first six months of the year from continuing operations were £10.4m (2020: £90.6m¹), down £80.2m and 89% behind the comparative period. The pandemic impacted the number and scale of the Group's events, with 12 in-person events (2020: 45 events) taking place across Turkey, Russia, Ukraine, China and India in the period. While the majority of these events had strong domestic attendance, the ongoing COVID-19 travel restrictions significantly impacted the attendance of international exhibitors and total number of attendees allowed at events. During the period the Group also ran its first virtual Meetup event - Groceryshop Spring Meetup, following the acquisition of Retail Meetup in December 2020 which performed ahead of management's expectations.

 

Five of the Group's top 10 events were unable to run. Shoptalk, Spring Fair, Bett, Mining Indaba and YugAgro will next take place in FY22.

 

The effect of changes in foreign exchange rates had a negative impact of £0.6m on the translation of revenue into sterling when compared to the prior period, largely as a result of the weakening of the Russian ruble relative to sterling in the period.

 

Profit before tax from continuing operations was £18.7m (2020: loss of £168.7m¹). Insurance proceeds of £49.0m have been recognised during the period in relation to claims regarding the cancellation of a number of events that were scheduled to take place in both FY20 and FY21. These insurance proceeds, together with ongoing cost management, helped to mitigate the revenue declines at a profit level.

 

The Group's share of profits from its associates and joint ventures was £1.6m in the period (2020: £4.9m), lower than in previous years primarily as a result of the Sinostar event, ChinaCoat, running at a significantly reduced scale due to the impact of COVID-19 and international travel bans into China.

 

The loss in the HY20 comparative period was driven by impairment charges of £166.8m recognised in respect of a number of our business units as a result of the COVID-19 outbreak and its effect on discount rates and forecast operating profits at the time - no such impairment charges have been recognised in the first six months of this year. The impairment charges recognised in the comparative period have also resulted in a lower amortisation charge of £13.8m (2020: £14.0m) on acquired intangible assets being recognised in the current period.

 

The effect of changes in foreign exchange rate changes has had a £2.7m negative impact on profits compared to the prior period. The increased impact on profits compared to revenue is due to losses recognised in the first six months of the year as a result of balance sheet translations which resulted in foreign exchange gains £4.1m lower than the comparative period.

 

The average exchange rates over the first six months of the year were:

 

	Six months ended 31 March 2021	Six months ended 31 March 2020	Movement
Russian ruble	101.5	83.5	+22%
Turkish lira	10.3	7.6	+36%
Indian rupee	98.8	92.0	+8%
Chinese renminbi	8.8	9.0	-2%
Euro	1.1	1.2	-8%
United States dollar	1.4	1.3	+23%

 

Diluted earnings per share from continuing operations for the first six months was 5.9p (2020: (120.2p)).

 

1	Restated for discontinued operations

 

Headline results

 

In addition to the statutory results, headline results are presented, which are the statutory results from continuing operations 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, although the adjusting items excluded may not be identical. The adjusting items presented are consistent with those presented in the previous year.

 

Headline profit before tax for the first six months of the year was £27.6m (2020: £19.4m¹). The results were adversely affected by event cancellations and postponements as a result of COVID-19 which had a £31.1m impact on headline profit before tax, most significantly due to the cancellation of five of the Group's top 10 events: Shoptalk, Spring Fair, Bett, Mining Indaba and YugAgro. This was offset by insurance proceeds of £49.0m recognised in the period in relation to claims regarding the cancellation or postponement of a number of events that were scheduled to take place in both FY20 and FY21.

 

Headline diluted earnings per share from continuing operations for the first six months was 8.5p (2020: 10.9p¹), reflecting the increase in headline profits.

 

The following table reconciles statutory profit/(loss) before tax to headline profit before tax:

 

	Six months to 31 March 2021	Six months to 31 March 2020	Year ended 30 September 2020
		Restated1	Restated1
	£m	£m	£m
Profit/(loss) on ordinary activities before taxation from continuing operations	18.7	(168.7)	(312.1)
Operating items
Amortisation of acquired intangible assets	13.7	14.0	29.2
Impairment of goodwill	-	124.0	195.1
Impairment of intangible assets	-	42.0	63.4
Impairment of investments in associates and joint ventures	-	0.8	4.5
Loss on disposal of investments	-	5.6	(2.3)
Transaction costs on completed and pending acquisitions and disposals	0.7	2.6	3.3
Integration costs	-	0.7	0.6
Restructuring costs - TAG	-	0.9	0.8
Tax on income from associates and joint ventures	0.5	1.5	1.5
Financing items
Write off of previously capitalised debt issue costs on refinancing	-	1.3	1.3
Revaluation of assets and liabilities on completed acquisitions and disposals	(6.0)	(5.3)	(3.2)
	__________	__________	__________
Headline profit/(loss) before tax	27.6	19.4	(17.9)

 

1	Restated for discontinued operations

 

Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. The charge has decreased in the period, as a result of the impairment charges recognised in the previous financial year which reduced the value of intangible assets by £63.4m.

 

In the comparative period, as a result of the COVID-19 outbreak and its effect on discount rates and forecast operating profits at the time, impairment charges of £166.8m were recognised in respect of goodwill (£124.0m), acquired intangible assets (£42.0m) and investments in our associates and joint ventures (£0.8m).

 

Transaction costs on completed and pending acquisitions and disposals relate principally to costs incurred on the acquisition of Retail Meetup completed in December 2020. 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 December 2019 acquisition of the Shoptalk and Groceryshop events. In the prior period integration costs of £0.7m were incurred in relation to the integration of the Shoptalk and Groceryshop events.

In the previous year restructuring costs of £0.9m were incurred in relation to the finalisation of the TAG programme, including the development of the global ERP software planned to be rolled out across the finance function, prior to being suspended as a result of the cost-saving measures implemented across the Group since the COVID-19 outbreak.

 

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.

 

The write-off of previously capitalised debt issue costs on refinancing in the previous year was 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 £8.8m), in relation to the remaining 40% interest in ABEC, the 2015 acquisition of the Indian exhibitions company including the Acetech portfolio (see note 20 for contingent liability disclosure), the imputed interest credit on the unwinding of the discount on the Group's deferred consideration receivable in relation to the disposals of ITE Expo LLC and its Azerbaijan and Uzbekistan event portfolios (credit of £0.9m), a loss on the revaluation of the ITE Expo LLC deferred consideration (charge of £3.1m) and loss on the revaluation of the deferred consideration payable for Retail Meetup (charge of £0.6m).

 

Cash flows

 

The Group's cash flow generated from operations over the first six months was (£0.4m) (2020: £25.1m) and cash conversion was 1% (2020: 137%), as presented below. Adjusted net debt at 31 March 2021 has fallen to £92.4m (2020: £157.2m) as a result of the receipt of £118.0m of net proceeds from the rights issue completed in June 2020 and insurance proceeds of £55.1m received since the beginning of the pandemic (excluding proceeds of £15.9m confirmed but not received in March 2021), offset by the acquisition of Retail Meetup completed in December 2020 for initial consideration of £18.5m.

 

	Six months to 31 March 2021	Six months to 31 March 2020	Year ended 30 September 2020
	£m	£m	£m
Cash generated from operations	(0.4)	25.1	7.8
Add back:
Net venue utilisation	-	0.9	0.9
Adjusting items (which have cash impact):
Transaction costs on acquisitions and disposals	0.7	2.6	3.3
Integration costs	-	0.7	0.5
Restructuring costs	-	0.9	0.8
Other adjustments:
Adjustment to reflect timing of cash flow for above adjusting items	-	0.8	0.8
Headline cash generated from operations (A)	0.3	31.0	14.1
Headline operating profit	31.3	23.8	(10.6)
Add back:
Depreciation of property, plant and equipment	2.0	2.3	4.8
Amortisation of computer software	0.5	0.7	2.4
Foreign exchange loss/(gains) on operating activities	(0.1)	(4.2)	(2.8)
Headline operating profit before non-cash items (B)	33.7	22.6	(6.2)
Cash conversion % (A/B)	1%	137%	-228%

 

Net venue utilisation is calculated as advances and prepayments to venues less utilisation of venue advances and prepayments.

 

2021 interim dividend

 

The Board has not declared an interim dividend (2020: nil) for the year ending 30 September 2021. The payment of dividends is currently restricted under the terms of the waivers agreed with the Group's lenders in May 2020.

Trading highlights and review of operations

During the period the Group organised 12 in-person events (2020: 45 events) and volume sales for the period were 39,400 sqm (2020: 288,900 sqm). The reductions compared to the prior period primarily reflect the event cancellations as a result of COVID-19. Following the acquisition of Retail Meetup in December 2020, the Group ran its first Meetup event, Groceryshop Spring Meetup, which performed ahead of management's expectations.

 

A reconciliation of the period-on-period movement in the Group's volume sales, revenue and headline profit before tax for the period is set out below in order to aid understanding of the Group's performance and improve the comparability of results.

 

	Square metres sold '000	Revenue £m	Headline profit before tax £m
First half 2020	308	96.3	19.8
Discontinued operations	(20)	(5.7)	(0.4)
First half 2020 - continuing operations	289	90.6	19.4
Biennial	(29)	(5.8)	(2.2)
Timing	-	0.2	(0.5)
COVID-19 postponements and cancellations1	(190)	(67.7)	(25.6)
Non-recurring	(2)	(0.4)	0.5
Annually recurring 2020	97	16.9	(8.4)
Acquisitions	-	1.3	0.6
Launches	-	0.7	0.6
FX Translation	-	(0.6)	(2.7)
Like-for-like change	(41)	(11.1)	(6.8)
Annually recurring 2021	56	7.2	(16.7)
Insurance proceeds	-	-	49.0
COVID-19 postponements and cancellations2	13	3.2	(0.1)
COVID-19 cancellation costs3	-	-	(5.4)
Timing	-	-	0.8
First half 2021	39	10.4	27.6

 

1	Represents the prior period performance of events that were postponed or cancelled in the current period as a result of COVID-19.
2	Represents the current period performance of events that were postponed or cancelled in the prior period as a result of COVID-19.
3	Represents costs incurred in the current period in respect of the cancellation of events as result of COVID-19.

 

Global Communities

 

The newly formed Global Communities division comprises Africa Oil Week, Breakbulk, Mining Indaba, Bett, CWIEME and the Shoptalk and Groceryshop portfolios, including the Group's virtual Meetup events following the acquisition of Retail Meetup in December 2020. The division also includes our UK retail portfolio, which comprises Spring and Autumn Fair, Glee and our UK fashion portfolio which includes Pure and Moda.

 

Revenues were £53.5m down compared to the comparative period due to the impact of COVID-19 and the cancellation of the division's in-person events in the first half of the year, including Bett, Spring Fair, Mining Indaba and Africa Oil Week. All these events will next take place in FY22.

 

Shoptalk and Groceryshop, two US-based market-leading e-commerce events focused on the retail and grocery segments respectively, were acquired in December 2019 but have yet to run under Hyve's ownership as a result of COVID-19. Groceryshop is scheduled to take place in September 2021 and Shoptalk is scheduled to take place in March 2022. In March, the Group ran its first virtual, Groceryshop Spring Meetup, which outperformed expectations. Shoptalk Meetup for Women took place in May and two further virtual Meetup events are currently scheduled, Shoptalk Fall Meetup (19-21 October 2021) and Shoptalk Europe Meetup (dates tbc). 

 

Other Global Communities events have now been cancelled for the current financial year, 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 Germany in June 2021 and May 2021 respectively.

 

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 83% compared to the comparative period due to the impact of COVID-19 on our Indian business.

 

One of our events in India was able to run in February prior to the country returning to lockdown, but all other Indian events scheduled to take place in the period were cancelled. It was also the negative biennial year for the Paperex event which took place in the comparative period.

 

As China felt the impact of COVID-19 much earlier than the rest of the world and government measures were therefore relaxed at an earlier stage, the Group's domestic events in the region were able to run and performed strongly. CIAAR, the air-conditioning and transport refrigeration exhibition in Shanghai, was the largest event to take place in the region and delivered revenues in line with pre-COVID performance.

 

A significant contributor to the division's profits is the ChinaCoat event operated by our 50% owned joint venture partner, Sinostar. The event was significantly smaller than the previous edition due to the impact of COVID-19 and international travel bans into China, It therefore contributed £2.8m (2020: £6.8m) to headline profit before tax.

 

Eastern & Southern Europe

 

The Eastern & Southern Europe division is comprised of our event portfolios in Turkey and Ukraine. Revenues for the division were down 74% from the comparative period due to the impact of COVID-19.

 

Worldfood Istanbul took place in November and was the Group's first event to take place in Turkey since the pandemic, although it was significantly smaller than the previous edition due to international exhibitors and visitors being unable to attend.

 

Three domestic Ukraine events took place in the period but the period was not without disruption from COVID-19 as a further two events were postponed into the second half after the country re-entered lockdown in March 2021.

 

Russia

 

Revenues on Russian events were 73% lower than the comparative period. Following the lifting of government measures, the division was able to run four events in Moscow in the period but the Group's largest first half event in Russia, YugAgro, the international agriculture exhibition, was unable to take place due to regional restrictions in place in Krasnodar.

 

MITT, the international travel and tourism event, took place in March, having been cancelled in the comparative period at the start of the pandemic. However, the event was significantly impacted by COVID-19 with international travel restrictions significantly impacting the event's performance. 

 

Mosbuild, the division's largest event, took place successfully in April, as did a further six of the Group's events in Moscow. The division's event schedule for the remainder of the financial year is expected to be able to run as planned.

 

Discontinued operations - Central Asia

 

The Central Asia division previously comprised our events in Kazakhstan, Azerbaijan and Uzbekistan. The disposal of the Kazakhstan business was completed in April 2021, following the disposal of our Azerbaijan and Uzbekistan event portfolios in August 2020, completing Hyve's exit from the region. In the comparative period the division delivered revenues of £5.7m and profits of £0.4m.

 

No Kazakhstan events were able to take place in the period as a result of COVID-19.

 

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.

 

·	Pandemic, natural disaster or terrorist incident
·	Political and economic instability
·	Liquidity risk
·	Venue unavailability
·	Repatriation of profits from subsidiaries
·	Breach of anti-bribery laws or similar
·	Breach of sanctions or sanction extensions
·	Breach of health and safety regulations
·	Breach of GDPR regulations
·	IT cyber/phishing attack resulting in data loss
·	Acquisition integration
·	Effective control over non-wholly owned subsidiaries
·	Pay and performance - for business benefit

 

All of these were also disclosed as principal risks and uncertainties in the 2020 Annual Report. No new risks have been identified for the 2021 Interim Results. Refer to pages 24-27 of the 2020 Annual Report, where details of the potential impact and mitigating actions in place for each is discussed.

 

Going concern

As part of the Directors' assessment of the appropriateness of adopting the going concern basis in preparing the Interim Report and financial statements, the current strength of the Group's liquidity has been considered alongside the impact a range of forecast scenarios would have on the Group's financial position over the next 12 months.

 

At 31 March 2021 the Group has available liquidity of £122.6m (2020: £92.8m) and adjusted net debt of £92.4m (2020: £157.2m). The Group's liquidity has strengthened significantly in the last 12 months as a result of the £126.6m raised in May 2020, strong cost control, insurance proceeds and rollovers for postponed and cancelled events. The Group's debt covenants were renegotiated in May 2020 with the leverage and interest cover ratios replaced with a £30m-£40m minimum liquidity covenant up to and including March 2022.

 

The Group has modelled a number of scenarios based on different assumptions regarding the duration and extent to which COVID-19 might reasonably be expected to impact the business. For each of our markets we have sensitised the revenue, profit and cash flow impact of reduced trading activity. We have considered the financial impact of markets and geographies re-opening at different stages over the coming months. For the purposes of considering the Group's going concern assessment, we have focused on two scenarios:

 

1.	A Base Case; and
2.	A Downside Case

 

The Base Case scenario represents the current event schedule and postponement plan for the remainder of FY21 but a return to a full events calendar from FY22. The Group has assumed that COVID-19 will still have a significant impact on the events being run in FY22 and into FY23, particularly in respect of international participation. While our Base Case scenario recognises the vaccine roll outs, it assumes a cautious return of international participation given the different stages countries are at with their respective vaccination programmes.

 

The Downside Case scenario assumes that restrictions remain in place across the Group's Western markets until December 2021 and local restrictions are brought back in across all other markets in which the Group operates, outside of mainland China. Under the Downside Case available liquidity is expected to remain in excess of £70m throughout the 12 month period from the date of the Interim Report.

 

The Directors have also modelled a reverse stress test, which assesses the liquidity and covenant position if the Group ran no events until March 2022 and no further insurance for events scheduled in 2021 is received. In this test the Group maintains available liquidity of in excess of £25m throughout the 12 month period from the date of the Interim Report but would breach the liquidity covenant in March 2022 and would therefore require a covenant waiver. The Directors feel that the assumptions applied in this reverse stress test are extremely remote, given that the Group has been able to run events in a number of markets since the outbreak of COVID-19 and the vaccine roll out in most major geographies in which the Group operates will allow a return to in person events.

 

Based on the current and projected levels of liquidity under the modelled scenarios the Directors believe that the Group is well placed to manage its financial obligations and other business risks satisfactorily and the Directors have been able to form a reasonable expectation that the Group has adequate resources to continue in operation for at least twelve months from the signing date of these financial statements.

 

The two modelled scenarios, however, would result in a breach of the leverage and interest cover covenants upon their reinstatement in June 2022, shortly after the 12 month period of assessment, without action being taken in advance of this date. The Group is confident in its ability to renegotiate the covenants, if required, on the basis of its strong liquidity position and the strength of its relationship with its lenders, demonstrated by obtaining waivers previously. In addition, the Group has a successful track record of insurance claims and further proceeds would be another mitigating factor.

 

In the event of a covenant breach, should the Group be unsuccessful in securing waivers, this may prevent the company from being able to continue its operations. This scenario cannot be discounted and therefore indicates that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. The interim financial statements do not include any adjustments should the going concern basis be inappropriate.

 

Given the time horizon and options available to the Group in securing either waivers or new forms of funding, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the Interim 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