A number of regions in which the Group operates are beginning to open but the situation remains fluid. Following the relaxing of Government measures to manage COVID-19 in several of these regions, the Group has now safely run a number of domestic events in China and Ukraine. The Group’s first Russian events since lockdown commenced yesterday (including WorldFood Moscow), resulting in the Group running a total of 12 face-to-face events in Q4 of FY20, delivering c.£9m of revenues.
Revenues for FY20 are now expected to be c.£105m (2019: £221m), reflecting a very strong start to the financial year but a significantly reduced event programme since March as a result of COVID-19. The Group is in a resilient financial position; in addition to the £126m rights issue completed in June, the Group has been successful in further insurance claim settlements and has taken significant cost saving measures to reduce cash burn. At 30 September, net debt is expected to be no more than £80m.
While the Board acknowledges that restrictions in certain markets are starting to be lifted, as we have seen from recent announcements in the UK, the timing and speed of the recovery of the global events industry remains highly uncertain with travel restrictions expected to remain in place for some time and further spikes in infections and government lockdowns a real possibility. Against this challenging backdrop, we remain mindful that any events that do take place are likely to be smaller than previous editions and it may take some time for customer confidence to return as markets reopen.
The Group continues to engage in positive and constructive discussions with its insurers regarding event cancellation and postponement claims in relation to a number of our FY20 events. Since the last trading update in late July, the Group is pleased to announce that a further £9.1m has been received, taking total recoveries secured to date to £22.0m.
The insurance cover is subject to the application of policy excesses and a per event limit which varies for each event, with an overall aggregate cap in respect of all insured events to 31 October 2020 of £62m.
Next year’s policy, already in place, covers certain events in the year to 31 October 2021 and has an overall aggregate cap of £50m.
We continue to pursue claims under the insurance policies as the event schedule undergoes further changes brought on by government restrictions arising from COVID-19.
Cost savings and cash burn
The cost saving programme, announced in May, targeted £9m of income statement savings in the current financial year, and £40m in FY21. Following decisive cost saving measures, the Group now expects to exceed the original FY20 savings target by c.£30m which is c.£5m ahead of management’s previously updated estimate.
In light of the ongoing uncertainty as to recovery in our markets, the Group is also targeting increased savings in FY21. Additional restructuring measures being introduced include the merging of our UK and Global Brands operations as well as further streamlining of the Group’s central headquarter overheads. With these measures we are now targeting to exceed our FY21 savings target by between £5m and £10m on an annualised basis to a total of between £45m and £50m.
These additional cost saving measures extend the period over which we have visibility of cash funding into FY22, even in the event that there are no further inflows from customers. Further detail of these cost saving measures and the impact on cash burn will be provided alongside the Group’s results in December.
Managing the portfolio
As a key part of our strategy, Hyve is focused on running market leading events and continues to actively manage its portfolio to align with this strategy. During the current quarter, the Group disposed of its entire event portfolio in Azerbaijan and Uzbekistan for a total consideration of up to c.£9.5m, payable over a number of years. Events in these regions were not expected to resume for some time due to COVID-19 and therefore this planned disposal – as well as aligning with our stated strategy – reduces the Group’s cash burn in the coming months.
The Group also announces in a separate announcement today that Andrew Beach, Chief Financial Officer (CFO), has decided to step down from the Board and will leave the Group on 30 September 2020. Andy will remain available over the next few months to ensure a smooth and orderly handover to his internal successor, John Gulliver, currently Group Chief Operating Officer (COO).
In light of the further targeted cost savings outlined above, the Board is taking this opportunity to restructure the senior finance team and promote from within the business. John will be appointed to the Board and to the newly-formed combined role of CFO and COO, effective from 1 October 2020.
In addition, as part of the restructure, James Warsop, the current Group Financial Controller, will be promoted to Group Finance Director.
Accelerating the omnichannel strategy
The Group continues to make progress in developing its omnichannel strategy, part of which is currently in proof of concept stage. ShopTalk Virtual Meetup, taking place in October, is showing encouraging early demand with promising registration numbers. This event will provide a key test case for the potential monetisation of a digitally delivered event.
The Group expects to outline more detail on its omnichannel strategy at the time of its preliminary results in December.
Mark Shashoua, CEO of Hyve Group plc said:
“The changes outlined today to restructure the business are necessary steps for Hyve to take in order to adapt to the likely prolonged impact of COVID-19. Hyve took early and decisive action to strengthen its balance sheet when the crisis emerged and with cost savings now above previous projections alongside the receipt of insurance proceeds, we are well positioned to weather the COVID-19 crisis.”
“At Hyve we are deeply passionate about the role of events in bringing people together from across the globe, acting as a catalyst to businesses, industries and economies. The return of 12 events since lockdown marks the early signals of a slow and safe return to face-to-face events, albeit we remain prudent and mindful that we may see further lock downs and it may also take time for customer confidence to return.”
For further information please contact:
Hyve Group plc
Mark Shashoua / Andrew Beach +44 (0)20 3545 9000
Charles Palmer / Emma Hall / Chris Birt / Jamille Smith +44 (0)20 3727 1000
About Hyve Group plc
Hyve Group plc is a next-generation global events business whose purpose is to create unmissable events, where customers from all corners of the globe share extraordinary moments and shape industry innovation. Hyve Group plc was announced as the new brand name of ITE Group plc in September 2019, following its significant transformation under the Transformation and Growth (TAG) programme. Our vision is to create the world's leading portfolio of contentdriven, must-attend events delivering an outstanding experience and ROI for our customers.
Where business is personal, where meetings move markets and where today's leaders inspire tomorrow's.