24 May 2022

 

Hyve Group plc

("Hyve" or the "Group")

 

2022 Interim Results  

Strong trading and faster pace of recovery, despite macro challenges

·      Continued recovery of in-person events at a rate faster than anticipated, with some surpassing pre-pandemic levels

·      Events in China disrupted by reinstatement of COVID-19 restrictions, which also impact Chinese international travel  

·      Market leading high-quality events driving customer spend and strong forward bookings

·      De-risked portfolio following Russian exit and strategic acquisitions enhancing omnichannel strategy

·      Entering the second half of FY22 with momentum and a streamlined portfolio of market-leading, omnichannel products, focused on high growth industries

 

Mark Shashoua, CEO of Hyve Group plc, commented:

''Over the last six months we have, once again, had to respond to challenges outside of our control. Thanks to the hard work of our people around the world, not only did we successfully navigate these challenges, but we are now seeing a strong recovery and have moved significantly closer to our long-term vision, more quickly than expected.

 

Hyve is almost unrecognisable compared with just five years ago. Having evolved from a predominantly emerging markets business, today we have a de-risked portfolio of market leading events, mostly focused on the UK, US and European markets. As such, going forward our focus will be on sectors, rather than geographies. This is a significant shift for Hyve, but absolutely the right one for creating sustainable value for stakeholders.

 

We continue to expand our brands by launching new products, such as Shoptalk Europe, Ahead by Bett, Green Energy Africa and the first in-person Fintech Meetup event, and applying new propositions, such as our facilitated meetings programmes. This innovation is crucial to our success, and we continue to invest in our future growth.

 

We expect the strong momentum we have seen in the first half of the year to continue. Our in-person events are recovering faster than anticipated, with many having already fully recovered. Whilst there are clearly global economic and geopolitical headwinds, the Group is in a strong position with renewed confidence. This will serve Hyve well when navigating through any potential challenges."

 

Financial headlines Results from continuing operations1	Six months to 31 March 2022	Six months to 31 March 2021
Volume sales	104,600 m2	24,800 m2
Revenue	£58.6m	£5.0m
Headline profit before tax2	£9.5m	£29.4m
(Loss) / profit before tax	(£11.5m)	£20.5m
Insurance proceeds3	£10.6m	£49.0m
Adjusted net debt4	£64.4m	£92.4m
Headline diluted earnings per share5	2.1p	9.1p

 

1.	Results from continuing operations only. Results for the six months to 31 March 2021 and year ended 30 September 2021 have been restated throughout the Interim Results to exclude the results from the Russian business which are presented as discontinued operations.
2.	Headline profit before tax is defined as profit from continuing operations before tax and adjusting items, which include amortisation of acquired intangibles, impairment of assets, profits or losses arising on disposal of Group undertakings, transaction costs on completed and pending acquisitions and disposals, tax on income from 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/credits on discounted deferred/contingent consideration - see note 3 to the condensed consolidated interim financial statements for details.
3.	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 £10.6m (2021: £49.0m) recognised in the period, £nil (2021: £34.2m) is in respect of FY20 events cancelled in FY20 and £10.6m (2021: £14.8m) is in respect of FY21 events cancelled in the prior year.
4.	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 and it is excluding cash presented as held for sale.
5.	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 headline and statutory results have been restated as a result of a prior period adjustment and for discontinued operations in order to provide a comparative measure - see note 1 and note 7 to the condensed consolidated interim financial statements for details. As a result, basic and diluted and headline basic and diluted earnings per share for March 2021 have also been restated.

 

 

Financial performance ahead of expectations as events recover faster than expected
·	£58.6m revenue (2021: £5.0m), ahead of full year revenues for FY21 and reflecting the return to pre-pandemic schedule of events with the exception of China
·	Headline profit before tax of £9.5m (2021: £29.4m). Excluding the impact of insurance proceeds received of £10.6m (2021: £49.0m), the Group's headline profits would have increased by £18.5m, which reflects the strong recovery of the Group's events
·	Adjusted net debt improved to £64.4m (2021: £92.4m) as a result of a return to positive operating cashflow and insurance proceeds
·	Liquidity position of £140.5m (2021: £122.6m) has been maintained despite macroeconomic headwinds faced
·	Covenant waivers secured up to and including March 2023 and, following the sale of the Russian business, a refinancing process has commenced
Strategic highlights
·	21 (2021: seven) in-person events ran with a faster pace of recovery than expected, and some having surpassed pre-pandemic levels:
	o	Domestic events attendance substantially recovered
	o	International business travel resuming faster than previously anticipated, except to and from China
	o	Continued investment in in-person events with the rollout of facilitated meetings on Spring Fair and Bett
	o	Launch of new in-person events in response to customer demand: Ahead by Bett in the first half of the financial year; Shoptalk Europe in the second half and Fintech Meetup and Green Energy Africa Summit in 2023
·	Almost full return to pre-pandemic event schedule, with the exception of China
·	Exceptional performance from the first Shoptalk to run under Hyve ownership outperforming all expectations by delivering a double-digit increase in like-for-like revenue compared to its 2019 edition
·	Continued expansion of omnichannel portfolio in key digital transformation ready sectors, with eight (2021: one) tech-enabled programmes successfully delivered in the reporting period
·	Strategic acquisitions of 121 Group and Fintech Meetup accelerate the rollout of the Group's omnichannel strategy
·	Diversifying the Board with two new Non-Executive Directors, Anna Bateson and Rachel Addison, who joined Hyve on 1 March 2022, following the departures of Stephen Puckett and Sharon Baylay
Continued support of Ukrainian colleagues
·	The Group continues to be in regular communication with those usually based in Ukraine. Salaries have been paid early and support offered to all staff, including relocation assistance
·	Events in Ukraine postponed until further notice
Exit of Russian market
·	In response to the ongoing conflict in Ukraine, the Group announced its intention to exit the Russian market on 15 March 2022; on 13 May 2022 the Group completed the disposal of the Russian business for a maximum cash consideration of up to £72 million, wholly structured as earn out consideration payable over a ten-year period; the group retained c. £10m from the Russian business prior to closing the sale (see note 7)
·	This solution provided stability for the local team, while crystalising some value for shareholders
·	The sale of the Russian business accelerated the Group's portfolio refocus towards advanced economies and omnichannel-ready sectors
Outlook
·	Momentum continuing into the second half, with forward bookings of £118m (2021: £28m) for FY22
·	COVID-19 related restrictions continue to have an impact, concentrated in China, affecting domestic events and Chinese participation in the Group's other events
·	Clear omnichannel growth opportunities lie ahead through the roll out of further facilitated meetings programmes
·	Net debt for the year ending 30 September 2022 expected to be in the range of £70m - £90m
·	Over the medium term, we expect to return to the level of operating profit margins achieved prior to the COVID-19 pandemic
·	Following a successful first half, Hyve enters the second half of FY22 with a de-risked and streamlined portfolio of market-leading, omnichannel products, concentrated in growing industries.

 

Analyst and investor conference call and webcast

There will be an analyst and investor presentation hosted by Mark Shashoua, Chief Executive and John Gulliver, Chief Finance and Operations Officer at 9.30 a.m. today. To join presentation please use the following link:

https://kvgo.com/IJLO/Hyve_HY22_Interim_Results_Announcement

There is also a facility to join the presentation and Q&As via a conference call. Participants should dial:

 

UK Toll Free: 0808 109 0700

UK-Wide: +44 (0) 33 0551 0200

New York New York: +1 212 999 6659

USA Toll Free: 1 866 966 5335

 

and quote Hyve HY22 Results when prompted by the operator.

 

A playback facility will be available shortly after the presentation had finished

 

Enquiries:

Mark Shashoua / John Gulliver / Marina Calero	Hyve Group plc	+44 (0)20 3545 9400
Charles Palmer / Dwight Burden / Jamille Smith	FTI Consulting	+44 (0)20 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 includes: Shoptalk, Spring Fair, Bett, Mining Indaba and the recently acquired Fintech Meetup, which is defining the future of events for the fintech ecosystem and uses state-of-the-art technology to power its world renowned meetings programme.

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

Interim Management Report

Executive summary 

FY22 has, to date, been another year when our agility and responsiveness as a business was tested as we faced a challenging macroeconomic and geopolitical environment, ultimately resulting in the acceleration of our long-term strategy and evolution.  

The invasion of Ukraine has, of course, dominated the news. Like most businesses with operations in the region, it has been the primary focus of our Board during the period. First and foremost, our priority throughout the crisis was, and continues to be, the wellbeing of our people. 

For our team of 87 in Ukraine, that has meant continuing to pay and bring forward salaries, helping with relocation, and maintaining regular communication. We have also continued to cover the operating costs of the business in Ukraine throughout this period. 

For our 206 people in Russia, and those in other regions who support the Russian business, we were committed to finding a solution which offered them stability. This has been achieved through the timely identification of a buyer. The sale process formally concluded on 13 May 2022 and as a result, we report our interim results presenting contribution from Russian operations as discontinued operations.

COVID-19, despite initial fears around Omicron, continues to have a limited impact on the business, concentrated in China where there are ongoing restrictions across most regions. This impacts our domestic events in China, including our Sinostar joint venture that we cancelled in the period, as well as the attendance of Chinese customers at international events.

Having just completed our Transformation and Growth (TAG) programme when COVID-19 first appeared, we were in the best position possible, not just to react quickly, but also to use this time as an opportunity to accelerate our strategic evolution as we continue to anticipate changing customer demands and ways of working. 

In the second half of last year, we reported promising recovery progress and have been pleased to see that momentum continue into FY22, at a faster than expected rate. 

We ran a total of 21 (2021: seven) in-person events between October and March including some of our major brands such as e-commerce leader Shoptalk, Africa Oil Week for the commodities community and global EdTech event Bett. We also hosted eight (2021: one) tech-enabled programmes including the launch of Curated Meetings at Spring Fair, the launch of Hosted Leaders at Bett, several 121 Mining Investment programmes and our newly acquired Fintech Meetup. 

We also took the opportunity to launch a number of new in-person events. In March we debuted Ahead by Bett, which responds to feedback from customers to create an event focused on higher education alongside Bett, our main EdTech event. In June, Shoptalk Europe will take place, which answers the demand for an e-commerce event of Shoptalk's calibre for the European market. Next year, Green Energy Africa Summit will run for the first time and will be hosted alongside Africa Oil Week in October. It will become the leading meeting place for those within our energy customer community who are driving the renewables debate in Africa. In addition, following the successful online Fintech Meetup in March, we have launched an in-person event for 2023, expanding our presence in this new sector. 

A faster recovery than expected  

Our in-person events have recovered at a faster pace than expected, with some surpassing their pre-pandemic performance levels.  

We delivered strong results against all key performance indicators including like-for-like customer spend, visitor density and forward bookings. 

Thanks to the tireless work done by our teams who continue to advance our events and engage our customer communities year-round, we have also seen an increase in customer like-for-like spend and both visitor and exhibitor NPS scores compared with previous years. This rise in customer satisfaction is resulting in strong forward bookings for FY22 which stand at £118m, compared with £28m at the same point in time for FY21. 

This emerging picture of future events gives us confidence that the trends we have seen since the pandemic are here to stay, and that this is no longer solely thanks to 'pent-up demand'. 

Record-breaking performance at Shoptalk 

A particular highlight from the period was the first Shoptalk to run under Hyve ownership, which outperformed all expectations and delivered a double digit increase in like-for-like revenue compared to its 2019 event. 

This exceptionally strong performance made Shoptalk 2022 the largest ever event by revenue for both the Shoptalk brand and for the Group.

Shoptalk, with its global, industry-wide reach and tech-enabled model, is a good illustration of where Hyve is heading - focusing in on global, industry-leading, omnichannel platforms.  

We are now looking ahead to the first edition of Shoptalk Europe which is to be held in London this June and is on track to significantly outperform its acquisition case.   

Sale of Russian business now complete

On 15 March, the Board announced its decision to formally exit the Russian market. A further update was issued on 6 April confirming the proposed sale to Rise Expo Limited for a maximum cash consideration of £72 million, wholly structured as earn-out consideration payable over a ten-year period (see note 7). The group retained c. £10m from the Russian business prior to closing the sale.

A class 1 circular was published on 11 May, which confirmed requisite approval had been obtained to proceed with the sale on the terms previously outlined. The disposal formally completed on 13 May 2022. Our decision to sell the Russian business reflected the significant challenges from a moral, legal, compliance, and operational standpoint that would arise from continuing to operate in Russia. The disposal provided some assurance and stability for those affected, including the staff of the Russian business. 

Looking ahead to Hyve's long-term strategic roadmap, the sale has further accelerated the refocusing of our portfolio towards advanced economies and omnichannel-ready sectors. 

Changing shape of the portfolio 

Both COVID-19 and the conflict in Ukraine have accelerated the change which was already well underway as part of our TAG programme, which completed in 2019 and saw our focus move from quantity to quality.  

Hyve is unrecognisable in comparison to just five years ago. Before beginning our TAG programme, we ran 269 in-person events, over 90% of which were based in emerging markets and had a regional focus. Today's de-risked portfolio of 50 market-leading in-person events and 21 tech-enabled platforms is 88% rooted outside of emerging markets and centres around providing our customers with market-leading products and services. In that time, average revenue per event has increased six-fold demonstrating that commitment to quality.

As we pursue our omnichannel strategy further, classifying our events based on their location will become less relevant, as this strategy sees us focus on advanced economies with a portfolio of international products. Therefore, looking ahead we will refocus our categorisation towards sectors rather than geographies, to reflect the evolving nature of the portfolio. 

Defining the next generation of events  

Events are on a journey, from annual B2B trade shows, to year-round, global, multi-channel hubs for industry community engagement and interaction, enhanced by technology.

The next generation of events brings together the best of the online and physical worlds. Online opportunities such as meetups, webinars and podcasts keep our customer communities connected and in conversation year-round, while in-person experiences such as awards ceremonies, workshops, roadshows and geo-cloned events mean they can deepen relationships, and benefit from the collaboration and creativity which only happens when people come together in the real world. 

Technology continues to enable us to evolve our proposition of shaping the next generation of in-person events, by powering opportunities such as facilitated meetings and improving our customer data.

Strategic acquisitions to support omnichannel evolution  

Despite the macroeconomic challenges we have faced, two key acquisitions were secured within the period, both of which strongly support our omnichannel development.

We acquired 121 Group (see note 8), the specialist omnichannel meetings programme provider for the mining sector, in November 2021 for initial consideration of £23m, and an estimated total consideration after earn-out of between £42m and £50m. 

121 Group comprises of more than ten networking programmes, spanning both online and in-person formats. In addition to strengthening our omnichannel strategy, 121 Group is also highly complementary to our Mining Indaba event, adding further diversity and significant value for its customers. Since the acquisition, 121 Group has performed in line with our expectations.

In March 2022, we acquired Fintech Meetup (see note 8), the online facilitated meetings platform for the US fintech sector, for initial consideration of £4m and contingent consideration of up to c. £38m payable in 2024 and 2025. This adds a new and rapidly growing sector to our product portfolio. 

Following its 2021 inaugural edition, revenue for Fintech Meetup 2022 more than doubled. In March 2023, Fintech Meetup will launch its own in-person event in the US, which is set to become the key kick-off event for the entire industry at the beginning of every year. The event will also feature a ground-breaking facilitated meetings programme which will extend to the entire fintech ecosystem. 

Secure financial position gives confidence  

Financial performance for the six months ended 31 March 2022 showed revenues exceeding those reported for the full year of FY21. Headline profit before tax of £9.5m (2021: £29.4m) was underpinned by the strength of the recovery, despite reduced insurance proceeds of £10.6m (2021: £49.0m).

We close the half year with a better-than-expected adjusted net debt of £64.4m and available liquidity of £140.5m. This strengthened balance sheet and robust liquidity position have been maintained despite the macroeconomic headwinds we have faced, and our de-risked portfolio means that future exposure to macroeconomic issues is reduced.

In November 2021 we extended our bank covenant waivers up to and including March 2023. Following the sale of the Russian business, we have commenced a process to refinance our existing debt facilities which currently expire in December 2023.

A diversified Board  

Hyve's ambition to create a more diversified Board made progress in the half year with a number of changes to our non-executive directors. Stephen Puckett, Non-Executive Senior Independent Director and Chair of the Risk Committee, and Sharon Baylay, Non-Executive Director and Chair of the Remuneration and ESG Committees, have both stepped down from their positions.

Hyve has subsequently appointed two new Non-Executive Directors, Anna Bateson and Rachel Addison, with effect from 1 March 2022. Both bring new perspectives and experience to Hyve's Board and will add significant value as the Group enters its next phase. Anna is also Chair of the ESG Committee, and Rachel is Chair of the Remuneration Committee. 

Strong trading momentum set to continue, but headwinds remain 

HY22 saw faster than anticipated revenue recovery across our key brands. We see this momentum continuing into the second half of the year with forward bookings already reaching £118m for FY22, like-for-like customer spend up, and a faster recovery to market-leading shows. 

While COVID-19 related restrictions continue to have an impact, it is reasonably limited and concentrated in China, where restrictions prevent us from running domestic events, as well as impact Chinese participation in international events.

Our net debt for the year ending 30 September 2022 is expected to be in the range of £70m - £90m. Over the medium term, we expect to return to the level of operating profit margins achieved prior to the COVID-19 pandemic. The geopolitical environment presents some headwinds, with events in Ukraine suspended until further notice.

We enter the second half of FY22 with a de-risked and streamlined portfolio of market-leading, omnichannel products. While mindful of the global economic and geopolitical headwinds, the Group is in a strong position with a renewed confidence following a better-than-expected first half, trading momentum continuing to build, a clearer focus on growing industries which are benefitting from significant digital disruption, and with an exciting vision for the future. 

 

Financial performance

 

Statutory results

 

Following the Group's decision to formally exit the Russian market and the advanced stage of discussions with Rise Expo Limited at the period end in respect of the sale of its Russian business, which subsequently completed on 13 May, the assets and liabilities of the Russian business have been classified as held for sale at 31 March 2022. The Russian business delivered revenues of £17.0m and a profit before tax of £4.8m in the first six months of the year, but the business is treated as a discontinued operation throughout the 2022 Interim Results. Unless otherwise stated all results are presented from continuing operations.

 

Revenues for the first six months of the year were £58.6m (2021: £5.0m), £53.6m higher than the comparative period, with the Group largely returned to a pre-pandemic event schedule. The Group ran a total of 21 in-person events (2021: seven events), excluding seven (2021: five) Russian events, in the first half.

 

The first Shoptalk event under Hyve's ownership took place in Las Vegas in March 2022 and delivered an exceptionally strong performance, outperforming its last pre-COVID-19 edition and was the largest event by revenue that the Group has ever run. In the UK, Spring Fair built on the momentum created at Autumn Fair last year and Bett returned following postponement from January to March due to Omicron, and was extremely well received by customers and wider stakeholders.

 

The impact of COVID-19 on the Group continues to reduce, with the exception of China, where the reintroduction of restrictions has had an impact on events in the country and Chinese exhibitor attendance at the Group's other events. Two Chinese events were postponed to later in the financial year and one was cancelled. ChinaCoat, the Sinostar JV event, was also cancelled in the first half having initially been postponed from December to March.

 

The Group has continued to execute its omnichannel strategy through the rollout of facilitated meetings across key in-person events and also the delivery of online networking programmes. The Group held a total of eight (2021: one) tech-enabled programmes during the reporting period.  This included three 121 Mining Investment programmes, following the acquisition of 121 Group in November 2021, and the Group's first Fintech Meetup event which took place shortly after its acquisition in March 2022.

 

Two of the Group's events in Ukraine that were scheduled to take place in March have been postponed until further notice and the Group does not expect to be able run any events in the region for the remainder of the financial year.

 

The Group's loss before tax was £11.5m (2021: profit of £20.5m¹). Further insurance proceeds of £10.6m (2021: £49.0m) have been recognised during the period in relation to claims regarding events cancelled in previous financial periods.

 

The Group's share of its losses from associates and joint ventures was £0.2m in the period (2021: profit of £1.8m), primarily due to the Sinostar event, ChinaCoat, being cancelled for the year.

 

The Turkish lira significantly weakened relative to sterling compared to the comparative period, increasing from 10.3 lira to the pound to 16.6 lira to the pound. The Euro and the Indian rupee also weakened relative to sterling by 5% and 2% compared to the comparative period. The Russian ruble was also particularly volatile, impacting the Group's results presented within discontinued operations. The value of the United States dollar was largely consistent with the comparative period.

 

Diluted earnings per share from continuing operations for the first six months was (4.3)p (2021: 6.5p¹)

 

¹ Restated as disclosed in Note 1.

 

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, 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 £9.5m (2021: £29.4m¹). Excluding the impact of insurance proceeds received of £10.6m (2021: £49.0m), the Group's headline profits would have increased by £18.5m, which reflects the strong recovery of the Group's events.

 

Headline diluted earnings per share for the first six months was 2.1p (2021: 9.1p¹), reflecting the decrease in headline profits.

 

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

 

	Six months to 31 March 2022	Six months to 31 March 2021	Year ended 30 September 2021
		Restated1	Restated1
	£m	£m	£m
(Loss)/profit on ordinary activities before taxation	(11.5)	20.5	(28.3)
Operating items
Amortisation of acquired intangible assets	14.3	13.7	27.8
Impairment of assets	2.9	-	19.0
Profit on disposal of investments	(3.1)	-	(0.2)
Transaction costs on completed and pending acquisitions and disposals	2.5	0.7	0.7
Tax on income from associates and joint ventures	(0.1)	0.5	0.5
Financing items
Revaluation of assets and liabilities on completed acquisitions and disposals	4.5	(6.0)	(6.4)
	__________	__________	__________
Headline profit before tax	9.5	29.4	13.1

 

¹ Restated as disclosed in Note 1.

 

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 acquired through the acquisitions of 121 Group in November 2021 and Fintech Meetup in March 2022.

 

An impairment charge of £2.1m has been recognised in respect of Fin-mark Srl, which previously organised the Aquatherm event in Ukraine. Deferred consideration receivable in respect of the October 2018 disposal of ITE Expo LLC, the portfolio of regionally-focused Russian events, has been impaired by £0.8m due to reduced expectation of payment following the Russian invasion of Ukraine.

 

In November 2021 the Group disposed of its 60% interest in ABEC, the operating company for a portfolio of exhibitions in India. The Group received upfront consideration of £1.0m for the sale. After the disposal of net liabilities of £0.7m, the release of cumulative exchange differences of £2.4m and the non-controlling interest of (£1.0m), a gain on disposal of £3.1m was recognised.

 

Transaction costs on completed and pending acquisitions and disposals relate principally to costs incurred on the acquisitions of 121 Group and Fintech Meetup. 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 deals. In the previous year the costs recognised related to the acquisition of Retail Meetup in December 2020.

 

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. In the six months ended 31 March 2022, the joint ventures recorded losses, resulting in a tax credit.

 

A number of the Group's acquisitions and disposals completed in recent years have future earn-out commitments, through deferred or contingent consideration payments. 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. The revaluation of assets and liabilities on completed acquisitions and disposals includes 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 Central Asia event portfolios (credit of £0.8m), a loss on the revaluation of the same deferred consideration receivable balances (charge of £0.6m), the unwinding of the discount on the Group's deferred consideration payable in relation to the acquisitions of 121 Group and Fintech Meetup (charge of £1.3m) and a loss on the revaluation of the deferred consideration payable for Fintech Meetup (charge of £3.4m).

 

Cash flows

 

The Group's cash flow generated from operations over the first six months was £26.7m (2021: (£0.4m)) and cash conversion was 209% (2021: 1%), as presented below. Adjusted net debt at 31 March 2022 has improved to £64.4m (2021: £92.4m) as a result of the increase in cash generated from operations.

 

 

	Six months to 31 March 2022	Six months to 31 March 2021 (restated)	Year ended 30 September 2021
	£m	£m	£m
Cash generated from operations	26.7	(0.4)	30.4
Adjusting items (which have cash impact):
Transaction costs on acquisitions and disposals	2.5	0.7	0.7
Other adjustments:
Headline cash generated from operations (A)	29.2	0.3	40.1
Headline operating profit	13.4	33.9	21.1
Add back:
Depreciation of property, plant and equipment	2.0	2.2	5.7
Amortisation of computer software	0.4	0.5	1.3
Foreign exchange loss/(gains) on operating activities	(1.8)	(0.5)	-
Headline operating profit before non-cash items (B)	14.0	36.1	28.1
Cash conversion % (A/B)	209%	1%	143%

 

 

2022 interim dividend

 

The Board has not declared an interim dividend (2021: nil) for the year ending 30 September 2022. The payment of dividends is currently restricted under the terms of the waivers agreed with the Group's lenders in May 2020 and extended in November 2021.

Trading highlights and review of operations

 

During the period the Group organised 21 in-person events (2021: seven events) and volume sales for the period were 104,600 sqm (2021: 24,800 sqm), excluding Russian events, with the Group largely returned to a pre-pandemic event schedule with the exception of China. The Group held a total of eight (2021: one) tech-enabled programmes during the reporting period, including Curated Meetings at Spring Fair, Hosted Leaders at Bett, Hosted Retailers at Shoptalk, Shoptalk Fall Meetup, Fintech Meetup and three 121 Mining Investment programmes. 

 

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 2021 (including discontinued operations)	39	10.5	26.8
Discontinued operations	(15)	(5.5)	2.6
First half 2021	24	5.0	29.4
Timing	(3)	(0.4)	0.3
COVID-19 postponements and cancellations1	(13)	(1.6)	(4.1)
COVID-19 cancellation costs2	-	-	5.0
Non-recurring	-	(1.3)	(0.9)
Annually recurring 2021	8	1.7	29.7
Disposal	(4)	(0.5)	0.5
Acquisitions	-	5.4	2.1
Biennial	7	0.7	-
Recurring	4	0.6	0.4
FX Translation	-	-	2.1
Annually recurring 2022	15	7.9	34.8
COVID-19 postponements and cancellations3	88	50.5	14.3
COVID-19 cancellation costs4	-	-	(0.7)
Timing	2	0.2	-
Insurance proceeds	-	-	(38.5)
Non-recurring	-	-	(0.4)
First half 2022	105	58.6	9.5
Discontinued operations	68	17.0	4.8
First half of 2022 (including discontinued operations)	173	75.6	14.3

 

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 costs incurred in the prior period on events cancelled in the prior period as a result of COVID-19.

³ Represents the current period performance of events that were postponed or cancelled in the prior period as a result of COVID-19.

⁴ Represents costs incurred in the current period on events cancelled in the current period as a result of COVID-19.

 

During the year the Group has made changes to its reportable segments. The Global Communities segment was divided into three new operating segments, reflecting the new management structure in place for these businesses as we refocus our categorisation towards sectors rather than geographies, to reflect the evolving nature of the portfolio. The three new operating segments are as follows:

 

	·      EdTech & Commodities;
	·      Retail, Engineering & Manufacturing; and
	·      RetailTech & FinTech

 

EdTech & Commodities

 

The EdTech & Commodities division includes the Bett portfolio, Africa Oil Week, Mining Indaba and the newly acquired 121 Group events.

 

Revenues for the division increased by £13.2m, primarily due to the return of Bett, which took place for the first time since the beginning of the pandemic. Despite the postponement of the event from January 2022 to March 2022 due to Omicron, demand for the event remained high and the reduced space available in March was fully sold out. Africa Oil Week was unable to run in South Africa due to local restrictions but successfully relocated to Dubai in November 2021.

 

Mining Indaba was postponed from February to May and therefore took place in the second half of the financial year, with reported revenue already in excess of the final pre-COVID-19 event.

 

Three 121 Mining Investment programmes have taken place since the acquisition of 121 Group in November 2021 with the acquired business performing in line with expectations.

 

Retail, Engineering & Manufacturing

 

The Retail, Engineering & Manufacturing division comprises the manufacturing and engineering portfolio (Breakbulk and CWIEME) and the UK retail portfolio, which comprises Spring and Autumn Fair, Glee and the UK fashion portfolio which includes Pure and Scoop.

 

Revenues were £13.3m higher than the comparative period, primarily due to the return of Spring Fair. The event took place in February and performed well despite the proximity of the event to the Omicron variant emerging. CWIEME Shanghai had been scheduled to take place in the first half of the year but has been postponed as a result of restrictions in China.

 

Breakbulk Europe and CWIEME Berlin will take place for the first time since the beginning of the pandemic in May, in addition to Glee, Pure and Autumn Fair which will also take place later in the year.

 

RetailTech & FinTech

 

The RetailTech & FinTech division comprises the Shoptalk, Retail Meetup and Fintech Meetup brands which are new acquisitions with high growth potential and reflect the Group's strategy to focus on omnichannel-ready industry sectors.

 

Shoptalk and Groceryshop are two US-based market-leading e-commerce events focused on the retail and grocery segments respectively. They were acquired in December 2019 and, as a result of COVID-19, ran events for the first time under Hyve's ownership in March 2022 and September 2021 respectively.

 

Revenues increased by £25.7m compared to the comparative period primarily due to strong performance from the in-person Shoptalk event which took place in March in Las Vegas and outperformed its last pre-COVID-19 edition and delivered the largest event by revenue that the Group has ever run.

 

In March 2022 the Group acquired Fintech Meetup LLC, the organiser of the leading U.S. based fintech facilitated meetings event. Following its 2021 maiden edition, revenue from Fintech Meetup 2022 more than doubled, taking place under the Group's ownership in March 2022. From 2023, Fintech Meetup will also be launching an in-person event, driven by customer demand, in addition to its market-leading virtual format.

 

Asia

 

The Asia division includes the Group's businesses in India and China. Revenues for the Asia division were down 73% (from £2.1m to £0.6m) compared to the comparative period due to the reintroduction of restrictions in China which prevented the Group's events from running in the first half.

 

Only one small event in China was able to take place, while one event was held in India. All other Chinese events have been cancelled or rescheduled to later in the year. Paperex, the Indian biennial event, was postponed from January due to Omicron but took place successfully in the second half, in May.

 

Historically, a significant contributor to the division's profits has been the ChinaCoat event operated by our 50% owned joint venture partner, Sinostar. The event contributed a loss of £0.2m to headline profit before tax as it was unable to run in the six months to 31 March 2022 due to the impact of COVID-19, whereas in the comparative period it contributed £2.8m to headline profit before tax.

 

Eastern & Southern Europe

 

The Eastern & Southern Europe division is comprised of the event portfolios in Turkey and Ukraine. Revenues for the division increased by £3.0m from the comparative period due to the division being able to run a close to normalised event schedule in the first half.

 

Turkeybuild and EMITT were both able to take place in the period after being cancelled in the comparative period. Eurasia Rail, a biennial event, also took place in the first half.

 

Five events took place in Ukraine in the period, including three events which ran for the second time since the pandemic and outperformed their previous editions. From March 2022 onwards, all events in the region have been postponed until further notice as a result of the ongoing conflict between Russia and Ukraine.

 

Discontinued operations - Russia

 

Revenues on Russian events were £11.5m higher than the comparative period, driven by the returning YugAgro, which had been unable to take place in the comparative period due to regional restrictions in place in Krasnodar, and growth across all other events.

 

In total, seven (2021: five) events took place in Russia in the period, also including Pharmtech & Ingredients and Aquatherm Moscow. Prior to the conflict with Ukraine, the region's events were trading well and delivering a strong recovery from the pandemic, but the impact of sanctions on Western participation was felt towards the end of the period, particularly in respect of MITT, the international tourism event.

 

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 2021 Annual Report. No new risks have been identified for the 2022 Interim Results. Refer to pages 36-39 of the 2021 Annual Report, where details of the potential impact and mitigating actions in place for each is discussed.

 

Since the date of the 2021 Annual Report, the invasion of Ukraine by Russia on 24 February 2022 increased Hyve's legal, compliance, operational and reputational risks from continuing to operate in Russia.

 

The Board assessed the risks following the invasion and this assessment contributed to the decision to proceed with a sale of the Russian business, announced on 15 March 2022.  The disposal formally completed on 13 May 2022, thereby addressing the most pressing risks from a continuing presence in Russia.

 

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 2022 the Group has available liquidity of £140.5m (2021: £122.6m) and adjusted net debt of £64.4m (2021: £92.4m). The Group's liquidity has strengthened significantly in the last 12 months as a result of the Group's strong trading and the recovery of its events, continued strong cost control and insurance proceeds in respect of cancelled events.

The Group has access to debt facilities totalling £207.5m, with scheduled repayments reducing the total available over the period to November 2023 to £172.5m before the facility matures in December 2023. In November 2021 the Group extended its existing covenant waivers by 12 months up to and including March 2023, with a minimum liquidity level of £40m required at the end of each month until then.

The Group has modelled a number of scenarios based on different assumptions regarding the next twelve months. For the purposes of considering the Group's going concern assessment, we have focussed on two scenarios:

1.  A Base Case; and

2.  A Downside Case

The Base Case scenario represents the Group's current event schedule for the remainder of FY22 and FY23. This scenario incorporates the Group's proposed disposal of its Russian business and reflects the latest trajectory of the recovery of the Group's events from the COVID-19 pandemic. The acquisitions of 121 Group and Fintech Meetup in the six months to 31 March 2022 have been assumed to perform in line with expectations.

The Downside Case scenario assumes that due to the current COVID-19 restrictions in place in China that the Group's events in the region will not be able to take place for their next scheduled edition. The Downside Case scenario also assumes that the Group's other events significantly underperform expectations throughout the forecast period, reflecting a material deterioration in the external environment, either as a result of a resurgence in the impact of the pandemic and/or wider macro-economic issues. This has been reflected through a 20% reduction to event revenues throughout the forecast period, with no incremental cost savings. 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 an even more extreme deterioration in event performance were to occur. This has been reflected through a 50% reduction to event revenues throughout the forecast period, with no incremental cost savings. In this test the Group would breach the liquidity covenant in June 2023 and would therefore require a covenant waiver. The Directors feel that the assumptions applied in this reverse stress test are extremely remote, given the performance of the Group's recent events and the current level of COVID-19 restrictions globally.

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 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. However, the two modelled scenarios and the reverse stress test would result in a breach of both the leverage and interest cover covenants upon their reinstatement in June 2023, without action being taken in advance of this date.

The possibility of a covenant breach in June 2023, shortly after the 12 month period of assessment, cannot be discounted, and as such indicates the existence of a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and therefore that the Group and Company may be unable to realise their assets or settle their liabilities in the ordinary course of business should the Group's lenders request repayment of the outstanding debt, as would be their right in the event of a covenant breach. 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.

A project to refinance the business, following the sale of the Russian business, has commenced with the intention of completing a refinancing of the existing facilities before our results announcement for the full financial year in December 2022.

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