TIDMHYVE
RNS Number : 2476M
Hyve Group PLC
07 May 2020
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For immediate release
7 May 2020
Hyve Group plc
("Hyve", the "Company" or the "Group")
Underwritten GBP127 million Rights Issue, Covenant Waivers and
Term Loan Repayment Deferrals, and Proposed Share Consolidation
The Company today announces the following measures as part of
its decisive response to the outbreak of COVID-19 ("Outbreak"), to
secure the future of the business and to position the Group for
market leadership and growth:
-- A fully underwritten rights issue to raise approximately
GBP126.6 million (before expenses) (the "Rights Issue")
-- A n agreement with the Group's lending banks to waive financial
covenants up to and including March 2022 (subject to inclusion
of a basic liquidity test)
-- Additional liquidity through the agreement with the lending
banks to defer loan amortisation payments of GBP35 million
until maturity in December 2023
The agreement with the banks is conditional on completion of the
Rights Issue. The Company also announces a proposed 10 for 1 share
consolidation (the "Share Consolidation").
The Board believes that the Rights Issue and the Share
Consolidation are in the best interests of the Company and the
Shareholders as a whole. Each of the Directors who is a Shareholder
intends to take up in full his or her rights to subscribe for New
Ordinary Shares under the Rights Issue in respect of his or her
holdings.
A prospectus and circular (the "Prospectus") containing full
details of the Rights Issue and Share Consolidation is expected to
be made available on Hyve's website ( http://www.hyve.group ) later
today, subject to approval by the Financial Conduct Authority. The
Rights Issue will be made on the terms, and subject to the
conditions, set out in the Prospectus.
Decisive response to the Outbreak: "Protect and Prosper"
The Group delivered a strong performance in Q1 of the current
financial year driven by Africa Oil Week and YugAgro which both
delivered double-digit growth on a like-for-like basis, as well as
a successful ChinaCoat event in Shanghai, run in collaboration with
its joint venture partner. The Group's performance in H1 included
strong year-on-year growth at Mining Indaba and Bett, but was
impacted by the measures announced by governments and authorities
to combat the spread of the Outbreak.
The Company undertook decisive action to address the challenges
of the Outbreak and initiated its response plan, building on the
strong platform in place prior to the Outbreak:
-- Events Postponement Plan - 48 events postponed; 13 events
cancelled; under continuous review
-- Identified cost savings of c. GBP10 million in FY 2020 and
c. GBP42 million in FY 2021
-- Stress tested to assess potential impact with a key assumption
that none of the Group's events take place until 1 January
2021 (other than a small number of events in China)
-- Proposed equity fundraise of GBP126.6 million through fully
underwritten rights issue
-- Waivers to leverage and interest cover covenants up to and
including March 2022 (subject to the inclusion of a liquidity
test) as well as additional liquidity through deferral of
loan amortisation payments agreed with lenders; conditional
on completion of the Rights Issue
The Directors believe that the fundamentals of the business
remain strong and that, following the successful conclusion of the
Rights Issue, the Group remains well positioned for growth in the
future.
Details of the Rights Issue, Covenant Waiver and Repayment
Deferral Agreement and Share Consolidation
-- Proposed consolidation of every 10 Existing Ordinary Shares
into 1 Consolidated Ordinary Share
-- Fully underwritten rights issue of up to 9 New Ordinary
Shares at 69 pence each for every 40 Existing Ordinary Shares,
equivalent to 9 New Ordinary Shares at 69 pence each for
every 4 Consolidated Ordinary Shares, to raise gross proceeds
of approximately GBP126.6 million (approximately GBP116.8
million net of expenses)
-- The issue price of 69 pence per New Ordinary Share represents:
o a discount of approximately 67.8% to the Closing Price
on 6 May 2020 (being the last Business Day prior to the
date of this announcement) and adjusted for the proposed
Share Consolidation; and
o a discount of approximately 39.0% to the theoretical ex-rights
price of 113.1 pence per New Ordinary Share calculated by
reference to the Closing Price on the same basis and adjusted
for the proposed Share Consolidation
-- The New Ordinary Shares will represent approximately 225.0%
of the Company's Consolidated Ordinary Shares that will
be in issue immediately following the Share Consolidation
and approximately 69.2% of the enlarged share capital following
completion of the Rights Issue (and following the proposed
Share Consolidation)
-- Proceeds to be used to reduce net indebtedness and provide
working capital flexibility to the Group to allow it to
protect the value of its Core Events
-- The Rights Issue, which is subject to shareholder approval
at a General Meeting on 27 May 2020, is fully underwritten
by Numis (Corporate Broker), Barclays and HSBC on the terms
of the underwriting agreement (the "Underwriting Agreement")
-- RWC European Focus Fund (the Company's largest shareholder)
who currently represents approximately 12.5% of the outstanding
Existing Ordinary Shares has confirmed that it is fully
supportive of the Company's strategy and fundraising proposals
and is intending to vote in favour of the Resolutions to
be proposed at the General Meeting to approve the Rights
Issue
-- Agreement to waive financial covenant tests up to and including
March 2022 (subject to the inclusion of a basic liquidity
test), conditional upon completion of the Rights Issue 1
-- Secured GBP35 million of additional liquidity through the
deferral of two term loan amortisation payments of GBP17.5
million each under the Group's banking facilities scheduled
for November 2020 and 2021 until maturity, subject to completion
of the Rights Issue
-- The Share Consolidation is proposed in order to achieve
a higher market price for the Consolidated Ordinary Shares
and, accordingly, a more appropriate Issue Price in the
Rights Issue
Background and reasons for the Rights Issue
-- Postponement of a significant number of events and the cancellation
of other events as a result of the Outbreak has had a material
adverse impact on the financial position of the Group
-- The Company is not aware of the full extent of the Outbreak
for the current financial year, but based on its Postponement
Plan, estimates an adverse impact of approximately GBP80m
on FY20 revenue; under this scenario FY20 revenue estimated
to be c. 20% below FY19
-- Due to the possibility of a prolonged period of extensive
disruption to the events industry across multiple geographies,
the Board carried out stress testing in order to ascertain
the liquidity requirements of the business over the near
and medium term.
o A key assumption underpinning this reasonable worst case
is that none of the Group's events take place until 1 January
2021 (with the exception of a small number of events in
China) and that the global economic backdrop will take some
time to stabilise and sales cycles will be reduced
o Under this reasonable worst case scenario, revenue for
FY20 revenue would be c. 55% below FY19 and c. 60% below
FY20 pre-Outbreak expectations; FY21 revenue would be c.
10% below FY19 and c. 30% below FY21 pre-Outbreak expectations
-- Although the length and extent of the business disruption
arising from the Outbreak cannot be definitively gauged
at this stage, the Directors believe that an equity fundraise
of GBP126.6 million (gross) will provide sufficient working
capital to allow the Company to weather this period of disruption.
As at 31 March 2020, the Group's adjusted net debt was GBP157.2
million relative to total committed facilities of GBP250
million. The Company requires additional liquidity prior
to September 2020
-- Management currently expect that the disruption caused by
the Outbreak may begin to normalise in the coming months,
as evidenced in the scheduled resumption of certain trade
events in China from May onwards (which are not organised
by the Group), however, the Directors have considered it
prudent to ensure contingency for a prolonged period of
disruption as envisaged by its reasonable worst case scenario
-- The Rights Issue will give the Group the time and flexibility
to overcome the challenges posed by the Outbreak even under
the reasonable worst-case scenario and the Directors believe,
will set the business on a firm footing for the future as
the global economy and its markets recover. The Rights Issue
is expected to reduce the Group's indebtedness and the Directors
would expect the net debt to 12 month forward looking EBITDA
ratio to return to below 2x by December 2021
-- The Company has consulted with a number of its major shareholders
ahead of the release of this announcement, including the
rationale for the Rights Issue and its structure
Summary of H1 results
-- Revenue of GBP96.3m with results impacted by the escalation
of the Outbreak and various consequential restrictions
impose by governments and authorities on large gatherings
-- Revenue increased by 1% on a like-for-like basis, and by
3% including when adjusted to include biennials and timing
differences, includes the results of biennial events and
those events that ran in the current period but did not
run in the comparative period due to changes in event dates,
in comparison to the previous edition of the relevant events
-- Headline profit before tax of GBP19.8m, with the result
adversely impacted by event postponements and cancellations
-- Statutory loss before tax of GBP168.3m after non-cash impairment
charges of GBP166.8m recognised primarily in respect of
the UK business as a result of the Outbreak
-- Dividends suspended and future dividends will be kept under
review and subject to bank waiver restrictions
-- Acquisition of Shoptalk and Groceryshop completed in December
2019, two US-based market-leading events focused on e-commerce
and online grocery subsectors. Shoptalk did not take place
in the period due to the outbreak and Groceryshop has been
cancelled this financial year, with the next iteration
of that event to be run in FY21
-- Hyve's interim results for the six months to 31 March 2020
have been released today in a separate announcement
1 Waiver introduces new interest rate ratchet for as long as net
debt:EBITDA remains above 3 times, reverting to standard interest
rates once the ratio falls below 3 times
Mark Shashoua, Chief Executive Officer, said:
"We started this year in a very strong position. We reported
good like-for-like growth in Q1 and added two market-leading
products, Shoptalk and Groceryshop to our portfolio.
When the pandemic began, we initiated Hyve's immediate response
to COVID-19. We responded rapidly and decisively by rescheduling
events, reducing our costs, managing cash and supporting our
customers and people through this crisis. In these unprecedented
circumstances we believe we have done everything we can and have
taken action at pace to protect the business. Today we have
strengthened our financial position through a GBP126.6m fully
underwritten rights issue, to provide additional security through
this crisis and to support the long-term success of the
business.
Market-leading events act as a key trading platform for many
industries, governments and regional authorities and we believe
will play a vital role in reigniting economies, and we are working
closely with customers and industry bodies to make this happen. We
have also accelerated our focus on building our omni-channel
capabilities driven by the Shoptalk and Groceryshop acquisition.
Digital is unlikely to replace face-to-face events, but it
complements it with online activity that supports our customers
year-round, and maximises the profile of our brands.
Whilst the impact of the temporary measures including lockdowns
and restrictions on travel and organised gatherings has been
severe, we believe these are short term challenges. Our strategy of
building a portfolio of market-leading events and the investment
made over the last three years puts us in a strong position and
provides a platform for growth as our events catalyse industries
and economies as we exit this crisis."
Words and expressions used within this announcement shall,
unless otherwise defined or unless the context requires otherwise,
have the same meanings as set out in the Prospectus
Indicative abridged timetable
Publication and posting of the Prospectus, 7 May 2020
notice of General Meeting and Form of Proxy
Record Date for entitlements under the Rights 6.00 p.m. on 22 May
Issue 2020
--------------------
General Meeting 9.30 a.m. on 27 May
2020
--------------------
Record Date for the Share Consolidation 6.00 p.m. on 27 May
2020
--------------------
Admission and dealings in the Consolidated 8.00 a.m. on 28 May
Ordinary Shares commence on the London Stock 2020
Exchange
--------------------
Admission and dealings in New Ordinary Shares, 8.00 a.m. on 28 May
nil paid, commence on the London Stock Exchange 2020
--------------------
Latest time and date for acceptance in CREST 11.00 a.m. on 11
and payment in full and registration of renounced June 2020
Provisional Allotment Letters
--------------------
Dealings in the New Ordinary Shares to commence By 8.00 a.m. on 12
on the London Stock Exchange fully paid June 2020
--------------------
Note:
(1) The times and dates set out in the timetable above and referred
to throughout this announcement are subject to change, in
which event details of the new times and dates will be notified
to the Financial Conduct Authority, the London Stock Exchange
and, where appropriate, Qualifying Shareholders through
a Regulatory Information Service.
(2) Any reference to a time in this announcement is to time
in London, United Kingdom, unless otherwise specified.
Prospectus
-- The Prospectus containing full details of the Rights Issue
is expected to be made available on Hyve's website ( http://www.hyve.group
) later today. Neither the content of the Company's website,
nor any website accessible by hyperlinks on the Company's
website is incorporated in, or forms part of, this announcement.
-- The Prospectus will be submitted to the National Storage
Mechanism and will be available for inspection at www.morningstar.co.uk/uk/nsm
following publication.
For further information, please contact:
Hyve Group plc +44 (0)20 3545 9400
Mark Shashoua / Andrew Beach
Numis (Sponsor, Financial Adviser, Corporate Broker,
Joint Global Coordinator, Joint Bookrunner & Joint
Underwriter) +44 (0)20 7260 1000
Nick Westlake / Matt Lewis / Hugo Rubinstein / William
Baunton
Barclays (Joint Global Coordinator, Joint Bookrunner
& Joint Underwriter) +44 (0)20 7623 2323
Alastair Blackman / Lawrence Jamieson / Ben West
/ Kunal Bidani
HSBC (Joint Global Coordinator, Joint Bookrunner
& Joint Underwriter) +44 (0)20 7991 8888
Andrea Coda / Sam Hart / Bhavin Dixit /Jonathan Surr
FTI Consulting +44 (0)20 3727 1000
Charles Palmer / Emma Hall / Chris Birt
Proposed Rights Issue of 9 New Ordinary Shares for every 40
Existing Ordinary Shares at 69 pence per New Ordinary Share
(equivalent to 9 New Ordinary Shares for every 4 Consolidated
Ordinary Shares) and Consolidation of every 10 Existing Ordinary
Shares into 1 Consolidated Ordinary Share
INTRODUCTION
The Board of Hyve announced today that it intends to raise
GBP126.6 million (before expenses) by way of the Rights Issue. The
spread of COVID-19 since the initial Outbreak in China in December
2019 and the subsequent global escalation of the crisis has
presented the Group with an unprecedented challenge as the
restrictions associated with the pandemic have resulted in the
postponement and cancellation of a large number of the Group's
events. This has consequently had a material impact on the Group's
financial position and the Rights Issue announced today is one of
the measures being undertaken to strengthen the Group's balance
sheet and set the business on firm foundations for the future.
The Rights Issue is being fully underwritten by each of
Barclays, HSBC and Numis on, and subject to, the terms of the
Underwriting Agreement. The principal terms of the Underwriting
Agreement are summarised in paragraph 8.1 of Part X (Additional
Information) of the Prospectus. A General Meeting is to be held at
the Company's offices at 2 Kingdom Street, London, England, W2 6JG
at 9.30 a.m. on Wednesday 27 May 2020 for the purpose of seeking
such approvals. A notice convening the General Meeting, at which
the Resolutions will be proposed, is set out at the end of the
Prospectus. Although Shareholders physical attendance at the
General Meeting is not encouraged due to restrictions imposed by
the UK Government in light of the spread of COVID-19, it is
recommended that Shareholders wishing to vote on the Resolutions
complete the Form of Proxy enclosed with the Prospectus and appoint
the Chairman of the General Meeting as proxy.
BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE
Background to the Rights Issue
The Company is a market-leading events business which operates
133 events globally (a small number of which are biennial) and
reported revenue and headline operating profit of GBP220.7 million
and GBP55.8 million, respectively, in FY 2019 (statutory operating
profit in FY 2019 being GBP14.2 million). The Company's results for
the FY 2019 period highlighted that the Company was making strong
operational and financial progress as it was reaching a successful
conclusion of its Transformation and Growth Programme (the "TAG
Programme"). The TAG Programme has focused on evolving the
Company's strategy towards creating a scalable platform and
building a portfolio of content driven, must-attend events aimed at
delivering an outstanding experience and return on investment for
Hyve's customers.
In December 2019, Hyve completed the acquisitions of Shoptalk
and Groceryshop, two US-based market-leading events focused on
e-commerce, for a total consideration of c. $145.3 million
(GBP110.1 million based on a conversion rate of GBP1 to $1.32 as at
18 December 2019), on a cash free, debt free basis. This
acquisition was part-funded by a non-pre-emptive placing of
Ordinary Shares in the Company alongside a subscription by the
founders and other management shareholders of the target as well as
from the Group's Facilities. At the time of the acquisition, the
Group also refinanced its senior secured term and revolving credit
facilities, to increase aggregate commitments to a total of GBP250
million (comprising a GBP100 million term loan facility and a
GBP150 million revolving credit facility) with a GBP50 million
incremental facilities accordion option.
On 23 January 2020, the Group published a trading update which
confirmed that FY 2020 had begun positively and that trading was in
line with management's expectations at that time. Revenue for the
first quarter of the year was higher by 18 per cent. against the
prior year, and 7 per cent. on a like-for-like basis, although the
first quarter of FY 2020 is comparatively small from a revenue
perspective (of 127 Group events scheduled for FY 2020, 25 per
cent. of such events were held in quarter one, but only three of
the Group's top twenty events). That announcement reaffirmed
management's confidence in meeting their then expectations for the
full year although economic and political uncertainty were cited as
potential headwinds. The strong performance in the first quarter of
FY 2020 was driven by Africa Oil Week (which recorded double-digit
revenue growth for the second year running) and YugAgro (which
recorded double-digit revenue growth for the third year running
since the implementation of the TAG Programme), as well as a
successful ChinaCoat event in Shanghai, run in collaboration with
the Group's joint venture partner.
The Outbreak has since negatively impacted economic conditions
and customer demand globally. The events industry is experiencing
significant and unprecedented disruption across multiple
geographies and sectors with the substantial majority of events,
from the kind of events the Group offers, to sporting events,
cultural and to other large entertainment events, that were
scheduled to take place through to the Reference Date, having been
cancelled or postponed worldwide, with the potential for further
cancellations and postponements over the coming months. Following
the Group's announcement of 23 January 2020, the Outbreak, first
reported in China in December 2019, continued to escalate. Over the
course of late February and early March 2020, it became clear that
the spread of the virus would have a material impact on the Group's
operations and near-term financial performance as well as the
events industry as a whole. The Group's initial response to the
crisis was to seek to reschedule its events in Asia to dates later
in the current financial year, thereby mitigating any negative
impact on financial performance for the year. However, it became
apparent as the COVID-19 situation worsened that the impact in
those geographies could not be fully mitigated and that the
Outbreak was spreading around the world. This rapid spread led to
unprecedented and widespread governmental restrictions on freedom
of movement, public gatherings and international travel being
implemented.
As a result of the changing global situation, on 5 March 2020
the Group announced that as a consequence of the Outbreak and the
associated restrictions (i) it had been required to postpone a
number of events in Asia (ii) revenue of non-Asian events from
Asian exhibitors was lower than previously expected due to travel
restrictions and (iii) that its newly acquired events (Shoptalk and
Groceryshop) were to be postponed as, due to the impact on key
customers and speakers, the Group did not consider that a
sufficiently high quality event could have been delivered under
those circumstances. The cumulative negative impact on statutory
profit before tax of those factors for FY 2020 was estimated at the
time to be GBP16 million to GBP18 million. At that time, the Group
expected all of its other events to proceed as originally scheduled
while acknowledging that the situation was evolving on a daily
basis and was being kept under constant review.
Following the 5 March 2020 announcement, the Outbreak escalated
into a global pandemic leading to unprecedented societal,
governmental and personal impacts and restrictions. As a result,
the events industry experienced worsening disruption across
multiple geographies and sectors, with a significant number of
events across the industry cancelled or postponed. Each region in
which the Group operates reacted differently at that stage and, in
most instances, governments and authorities placed certain
restrictions on freedom of movement, travel and on large gatherings
in order to contain the spread of the virus. This included, in the
case of Shoptalk, disruption caused by the declaration of a state
of national emergency by the US President, Donald Trump, and
subsequent crisis management measures implemented by the Governor
of Nevada, Steve Sisolak, which had the resultant effect of closing
the Shoptalk venue. At an organisational level, companies have
implemented large scale home working practices and embargoes on
business travel both domestically and internationally.
Starting in March 2020, as a result of uncertain impact of the
Outbreak on the economy, the Group began experiencing a decline in
contractual bookings for upcoming events and a delay in the receipt
of payments from customers who had already booked for upcoming
events. The postponement and cancellation of certain events in the
second quarter of FY 2020 have resulted in the Group's results
declining in the six months ended 31 March 2020. On 7 May 2020 the
Group reported its unaudited results for the six months ended 31
March 2020 with revenue reported for the period down by 10.7 per
cent. to GBP96.3 million compared to GBP107.8 million reported for
the six months ended 31 March 2019. Headline profit before tax for
the six months ended 31 March 2020 was GBP19.8 million (statutory
loss before tax of GBP168.3 million for the same period) compared
to GBP24.5 million in the six months ended 31 March 2019 (statutory
profit before tax of GBP1.9 million for the same period). On a
like-for-like basis revenue grew in HY 2020 by 1.0 per cent. with
Mining Indaba and Bett delivering strong year-on-year growth and an
improved performance at Spring Fair despite the impact of Brexit
and reduced attendance as a result of the Outbreak. In the six
months ended 31 March 2020 14 events were postponed or cancelled
with an adverse revenue impact in excess of GBP35 million against
expected revenue for the period. The results were adversely
impacted by event postponements and cancellations which had a
GBP7.9 million impact on headline profit before tax, most
significantly due to the cancellation of MITT, due to take place in
Russia in March 2020. The acquired Shoptalk event was also
originally due to take place in March 2020 but has been postponed
until September 2020 and therefore the results includes GBP2.8
million of Shoptalk costs but no Shoptalk revenue in the period
post-acquisition. Adjusted net debt at 31 March 2020 was GBP157.2
million.
As a consequence of the escalation of the Outbreak and the
various consequential restrictions imposed by governments and
authorities on large gatherings, the Group announced on 23 March
2020 that it had put in place a large-scale events postponement
plan in many of its markets (the "Postponement Plan"). This
followed the implementation or strengthening of restrictive actions
by governments in a number of the Group's key geographies including
Germany, Russia, Turkey, Ukraine, the UK and the US, in addition to
the pre-existing restrictions in China and other parts of Asia. The
Group made clear that, should the situation deteriorate further,
more events would need to be postponed, potentially even beyond the
current financial year. In response to this
unprecedented global challenge to the events industry, the Group
further announced that it was to implement significant cost-cutting
and cash conservation measures in order to ensure that working
capital is managed as effectively as possible. The Group also
announced it had entered into preparatory discussions with its
lenders in order to obtain its banks' support regarding gaining
additional covenant headroom and financial flexibility. The Group's
announcement of 8 April 2020 set out that it had received waivers
in relation to the covenant tests due to take place on 30 June
2020. It also confirmed that while the second quarter of FY 2020
had been impacted by the restrictions arising from the Outbreak,
the Group had successfully run three of its top 10 events during
the quarter (Bett UK, Mining Indaba and Spring Fair).
In connection with the Outbreak, the Company entered into the
First Waiver Letter on 7 April 2020, pursuant to which the Company
was granted a waiver of certain of its obligations in respect of
the Facilities, including regarding certain financial covenants
tests. The Group has recently also entered into the Second Waiver
Letter with its lenders in respect of (among other things, subject
to certain conditions, including the successful completion of the
Rights Issue) waiving its (i) consolidated total net debt to
adjusted EBITDA ratio covenant and (ii) consolidated EBITDA to
consolidated net finance charges ratio covenant, in each case,
until and including 31 March 2022 (subject to compliance with the
liquidity comment described in paragraph 8.2 of Part X (Additional
Information) of the Prospectus) and deferring the 30 November 2020
and 30 November 2021 term loan amortisation payments until the
scheduled term loan termination date (which is currently 17
December 2023). The interest payable by the Group on the Facilities
increased pursuant to the Second Waiver Letter, from 2.65 per cent.
per annum to 3.40 per cent. per annum, when the Second Waiver
Letter becomes effective (but this may reduce at any time
thereafter to 2.90 per cent. per annum (or lower) if (and for such
time that) the leverage ratio for the Group reduces to 3.00:1.00
(or lower) for the period set out in the Second Waiver Letter. The
Second Waiver Letter will be effective following the successful
completion of the Rights Issue, and the principal terms of the
Waiver Letters are summarised in paragraph 8.2 of Part X
(Additional Information) of the Prospectus.
The Postponement Plan, Event Schedule and Cancellations
As it became clear that the potential implications of the
Outbreak were likely to be far reaching across its geographies, the
Group acted to implement the Postponement Plan. This has involved
regular dialogue with key customers and venue operators to ensure
that any postponed events will continue to provide the premium
experience that the Group's customers have come to expect once they
are held on the new date. The Postponement Plan has also included
productive dialogue with many venue owners to rollover certain
costs to the new dates for postponed events or, in the case of
cancelled events, to the FY 2021 edition. Similarly, although the
Group has granted refunds to a certain number of customers in
relation to postponed and cancelled events, the Group has had
positive conversations with customers in relation to cash already
received in relation to those events. The postponement or
cancellation of events has not, as of the Reference Date, resulted
in any material changes to the Group's future event schedule beyond
the current period of disruption and the Directors currently expect
that the Group's events in FY 2021 and beyond will run according to
their previously envisaged timescales and at the same venues.
However, depending on the duration of the restrictions arising from
the Outbreak, additional events may be postponed or cancelled, with
some events that have been postponed potentially being cancelled
(rather than postponed again) as a further postponement would
likely bring those events too close to their scheduled FY 2021
editions. The positive dialogue with customers has been
demonstrated at a number of the Group's events. For example,
following the postponement of Shoptalk from March 2020 to September
2020, 88 per cent. of speakers have re-confirmed their attendance;
83 per cent. of sponsors have rebooked for September 2020 and 73
per cent. of Hosted Retailers and Brands have confirmed attendance
in September 2020. Bett Asia, among others, has seen a similarly
positive reaction to its postponement with 95 per cent. of event
sponsors confirming acceptance of the new date and 95 per cent. of
VIP speakers reconfirming attendance, with the venue also agreeing
to host the event on the new date at no additional cost.
Prior to the Outbreak, the Group had been scheduled to hold 127
events in FY 2020. As at the Reference Date, as a result of the
Outbreak, 48 of those events have been postponed, with 30 of those
having been rescheduled to new dates in the current financial year,
18 events having been rescheduled to new dates outside of the
current financial year and 13 events having been cancelled
outright, with the next iteration of those events now to occur in
FY 2021. Further detail of the Group's schedule of events for FY
2020 as at the Reference Date is set out in Appendix II to the
Prospectus.
Based on the information available at the Reference Date, the
Group has postponed or cancelled, or expects to postpone or cancel,
all of the Group's events through to the end of July 2020 (other
than one, CWIEME Shanghai, which remains scheduled to take place at
the end of July 2020) as well as nine other events that were
scheduled for August and September 2020 (including Groceryshop). As
at the Reference Date, the Group has cancelled 13 events that had
been scheduled to take place during FY 2020, such events having
contributed GBP25 million in FY 2019, excluding Groceryshop which
was acquired during FY 2019. As at the Reference Date, the Group
has postponed 30 events that had been scheduled to take place in FY
2020 to a later date in FY 2020, and 18 events that had been
scheduled to take place in FY 2020 to a date in FY 2021, such
events having contributed GBP34 million and GBP21 million,
respectively, to the Group's revenue in FY 2019, excluding Shoptalk
which was acquired during FY 2020.
The Directors expect reduced attendance at, and revenue
generated by, events which are held during the remainder of FY 2020
and in FY 2021 relative to the corresponding events in FY 2019,
primarily because of travel restrictions, reluctance to travel to
other countries or reduced corporate travel budgets which the
Directors expect to result in reduced attendance at events by
customers who do not live or operate in the country in which the
event is held. Whilst the Board cannot be certain of the exact
level of reduction in attendance at present, the Directors expect
that domestic audiences will recover more quickly than
international audiences as people will be more willing to travel to
events within their own country and internal domestic restrictions
on travel may be eased sooner than the restrictions in place on
international travel. In addition, it is likely that, even
following the easing of the Outbreak and the lifting of related
restrictions, the occurrence of second or subsequent waves of
infection or the establishment of "new normal" protocols to fend
off infection, requiring social distancing in air and other travel
and relating to group gatherings would continue to adversely impact
attendance at, and revenue generated by, the Group's future
events.
Given the operational demands of the Group's events and the
commercial landscape required in order to most successfully run an
event, if such restrictions are not relaxed in line with the
Group's present expectations and the impact of the Outbreak
witnessed up to the Reference Date continues or worsens, the Group
may need to postpone (likely until FY 2021) or cancel more or
potentially all of its remaining events scheduled through the
remainder of the current financial year and beyond. As at the date
of the Prospectus, the Company is not aware of the full extent of
the financial impact of the Outbreak for the current financial
year, given the evolving nature of the issue, but as at the
Reference Date, the Directors estimate that, there will be an
impact of approximately GBP80 million on revenue for FY 2020 which
will therefore likely be approximately 20 per cent. below FY 2019
based on the Postponement Plan. There can be no assurance that
these estimates will not be increased or changed in a manner that
is adverse to the Group.
Cost savings and cash conservation
Throughout the developing Outbreak, the health and safety of the
Group's employees, customers and exhibitors has been the Directors'
priority and the Group has followed the advice of the World Health
Organization and Public Health England in response to the
crisis.
Management actions have also sought to protect the long term
future of the business and in particular the Core Events while
tightly controlling cash and managing the programme of
postponements. The Group has sought to implement these measures as
a part of a larger coordinated response to the Outbreak focused
across 10 initiatives and business areas (Funding, Venues, Costs
and Working Capital, People, Commercial and Sales, Operations,
Marketing, Systems, Legal and Communications).
The measures taken to reduce costs and preserve cash include the
following:
-- HQ restructuring: a freeze on recruitment has been implemented
and the contracts of temporary staff have been terminated.
A consultation process in relation to potential redundancies
has commenced and is expected to result in further savings
from July onwards. The Company has, in seeking additional
staff savings in the short term, placed 131 members of full-time
staff on a "furlough" arrangement with effect from 4 April
2020 in accordance with the UK Government Coronavirus Job
Retention Scheme announced on 26 March 2020. In addition,
all Directors and a significant number of key managers have
agreed to take a temporary 20 per cent. reduction in salary
on a voluntary basis, bonus schemes have been removed and
a number of staff are working reduced hours with much of
the UK operation (the largest in the Group) moving to a
four-day week on a temporary basis starting from May for
an initial period of three months;
-- Non-staff savings: a Group wide ban on non-essential travel
and conferences; removal of incentives and awards; removal
of expenses reimbursement; reduction of internal training
initiatives has been implemented;
-- Capital expenditure: a significant reduction of capital
expenditure has already been implemented with only essential
replacement of assets and equipment now being permitted.
This includes a delay to the roll-out of a Group wide ERP
System which was the final element of the TAG Programme
to be implemented; and
-- Events and venue savings: discussions are on-going with
venue operators regarding the potential to roll forward
costs associated with cancelled or postponed events. Staff
savings as a result of fewer onsite staff and lower requirement
for content and other direct event related expenditure are
also planned.
The cost-saving programme outlined above is intended to identify
and implement up to GBP10 million of savings in FY 2020
(approximately GBP9 million of which from HQ restructuring,
non-staff savings and venue savings, and approximately GBP1 million
of which from reduced capital expenditure) and GBP42 million in FY
2021 (approximately GBP40 million of which from HQ restructuring,
non-staff savings and venue savings, and GBP2 million of which from
reduced capital expenditure).
Other management actions
The Group is exploring the implementation and adoption of a
variety of strategic and operational measures to ensure that it is
well placed to adapt to what will be an altered operating
environment for the near term following the lifting of
restrictions.
The Group will, in line with its current operating practices,
look to establish a new and evolving industry leading best practice
operating model across all its market leading shows that are held
the period post-Outbreak, with the Group's best practice approach
being developed alongside overarching guidance from the World
Health Organisation and (in each case) respective local
governmental and health advisories. In exploring updated best
practice response measures, the Group's primary consideration is
the health, safety and wellbeing of all those involved in the
running of an event, both attending customers and Group personnel,
as well as supporting third parties (such as its venues,
contractors and third-party suppliers). Measures being put in place
to safeguard the Group's employees include working from home for
many teams while for those working in offices self distancing, deep
cleaning, provision of hand-sanitisers and masks is being
implemented. Management maintains regular and frequent dialogue
with employees in order to keep them informed.
Whilst the exact requirements of each event will be considered
on a case by case basis depending on the nature and geographical
location of that event, the Group will look to standardise its
rigorous approach to secure the health and safety of participants,
staff and suppliers onsite. Operational matters already under
consideration for venues include the staggering of attendance using
timebound access slots to ensure control of access and capacity
management. The Group is surveying and investigating measures
relevant to enhanced hygiene and biosecurity, attendee screening,
attendee health verification, socially distant routing in and
outside of venue, layout alteration to allow for appropriate
distancing for customer engagement (for example in the case of
content sessions and the Hosted Buyer Programme), bespoke emergency
response protocols and additional sanitary and waste management
systems.
These measures will be adapted, in each case, to the event in
question having regard to matters such as venue footprint, access
and construction, a review of the applicable demographic data
available (including attendance split by domestic and international
attendees), prevailing guidance from regulatory, advisory and
governmental bodies as well as advancement in technological
responses between the date of the Prospectus and the date of the
event.
In working with its venue partners the Group is exploring an
amalgamation of venue specific requirements in its operating
procedures to ensure maximum protective coverage for on-site
matters including temperature checking, catering, frequent deep
cleaning, quality controls check, on site protective clothing and
supporting technologies to streamline the same. Consideration will
also be given to the enforcement, on-site, of any country specific
guidance in place at the relevant time of the event.
The implementation of agreed procedures and protocols adopted by
the Group will involve additional staff training in support of
those actions, alongside the delivery and monitoring of onsite
processes. The Group will, once its responses measures are agreed,
ensure a route of communication to its customers in this regard,
considering also the need to ensure it supports its attendees with
the navigation of any additional travel controls prevailing in
territory, such as visa, permit or other certifiable entry
requirements as the case may be.
In seeking to be at the forefront of current and future industry
responses to the Outbreak the Group is active across a number of
industry representative forums and channels. The Group's CEO, Mark
Shashoua is an active participant of the UFI CEO Think Tank
("CTT"). The CTT was established by UFI in its capacity as the
Global Association of the Exhibition Industry and meets regularly
to consider, advance and evolve industry level responses and
approaches to a wide variety of matters, with its current agenda
being focussed on the impact of and responses to the Outbreak,
alongside the consideration of appropriate forms of planning and
preparation for the response period thereafter. Mark Shashoua is
also a member of the UK Events Industry Leaders Advisory Panel,
which is also attended by Nigel Huddleston (UK Government Minister
for Tourism at the Department for Digital, Culture, Media and
Sport) which met most recently on 29 April 2020 to discuss and
respond to Government's economic measures pertaining to the events
industry, the challenges the industry was facing and matters of
further support needed from Government.
The Group is also represented in both The Association of
Exhibition Organisers ("AEO") UK Operations Forum where its
representative is the appointed Forum Chairman, and the AEO
International Operations Forums. The AEO brings together operations
leaders representing many of the main organisers within the events
industry, with their current focus being the coordinated and
collective response to the challenges posed by the Outbreak at an
operations level. The Group will also be represented on the AEO
Event Recovery Panel, a special purpose panel currently being
established and which will be dedicated to the recommencement of
events in the short to medium term, addressing operational matters
and producing industry specific best practice and thought
leadership.
The Group itself has established a cross-segmental taskforce to
co-ordinate and implement its best practice approach to resuming
each of its events. The primary objective of the taskforce is to
review, refine and approve regional implementation plans which will
set out the detailed provisions for running events safely for all
attendees. The Group intends to prioritise communicating its
recommencement operating plans with customers and strategic
partners in order to foster a culture of best practice, compliance
and innovation in the response to the resuming its events schedule
in FY 2020 and FY 2021.
Dividends
The Board has taken the decision not to pay a dividend for the
current financial year, during which it will continue to invest in
the Group's Core Events. In addition, the terms of the Second
Waiver Letter provide that, whilst the amendments to the Facilities
introduced by the Second Waiver Letter are in place, the Company is
precluded from paying dividends without obtaining the consent of
the majority of the Group's lenders. Following completion of the
Rights Issue, the payment of dividends by the Company to its
Shareholders will therefore be restricted in accordance with the
terms of the Second Waiver Letter. The Group considers such
arrangements to be typical in the context of the amendments agreed
pursuant to the Second Waiver Letter.
The Board understands the importance of optimising value for
Shareholders and it is the Directors' intention to return to paying
a dividend once they believe it is financially prudent for the
Group to do so, following the Group again becoming compliant with
the covenants in the Facilities (prior to their amendment by the
Waiver Letters) and having repaid the deferred loan amortisation
payments.
Potential government funding
In addition to management action, HM Treasury has announced a
package of temporary and targeted measures to support businesses
through this period of disruption caused by the Outbreak. The
Company is in active discussions in relation to access to these
initiatives, including the COVID Corporate Finance Facility
("CCFF"). This facility is designed to support liquidity among
larger firms, by providing short term funding to help them to
bridge Outbreak-related disruption to their cash flows. The Company
has applied for the CCFF and is actively investigating the
availability of this and other similar governmental programmes in
the UK. There is no certainty that the Company will be successful
in securing any funding under the CCFF and, even if successful,
there is no way of predicting the actual amount of funding the
Company may be able to obtain. If the Company is successful in its
application to access the CCFF (or other similar governmental
programme), subject to the specific terms offered to the Company in
respect its participation in such programme being acceptable, the
Company may (subject to the consent of a majority of the Group's
lenders under its Facilities Agreement to permit the indebtedness
incurred by the Group under the CCFF) elect to access such funding
and would use any proceeds for normal working capital
requirements.
However, given the uncertainty as to availability, amount, terms
and timing of any such funding, for the purpose of the Group's cash
flow and working capital forecasting the Directors have assumed
that the Company will not receive any funding under the CCFF or
similar governmental programmes. Furthermore, the Directors do not
expect that any such amounts would be sufficient to enable to the
Group to continue as a going concern without receipt of the
proceeds from the Rights Issue and without the amendments to be
effected by the Second Waiver Letter (such amendments being
conditional on completion of the Rights Issue). The Directors
believe, therefore, that the receipt of any such funding, or the
failure to acquire such funding, is not and will not be material in
the context of the Rights Issue and the Group's business, results
of operations, financial condition and prospects.
In relation to its the US operations the Group has been
considering funding options pursuant to the Coronavirus Aid,
Relief, and Economic Security (CARES) Act (the "CARES Act"). On 27
March 2020 the President of the United States signed the CARES Act
for the primary purpose of providing emergency financial support
for individuals, families, and businesses affected by the Outbreak.
For smaller and specially qualified businesses, the Act offers
financial assistance via the new Paycheck Protection Program
("PPP"). The PPP provides loans to companies that meet certain
specified size requirements ("PPP Loans") pursuant to the terms of
the loan at least 75 per cent. of a PPP Loan must be used for
payroll costs, with the full PPP Loan (including interest) may be
forgivable to the extent used for such payroll costs or mortgage
interest, rent and utility payments.
Agreement of covenant waivers and deferral of term loan
amortisation
As at 31 March 2020, the Group's net debt was GBP177.6 million
relative to total committed facilities of GBP250 million. The
Group's Facilities currently include, inter alia, a consolidated
total net debt to adjusted EBITDA ratio covenant which is tested on
a last twelve months basis every 3 months from 30 June 2020
although (subject to certain conditions, including the successful
completion of the Rights Issue) this covenant test has been waived
until (and including) 31 March 2022, as set out in the Second
Waiver Letter. The lending banks and the Group have also agreed
(among other things, subject to certain conditions, including the
successful completion of the Rights Issue) (a) the suspension of
testing of the Group's consolidated EBITDA to consolidated net
finance charges ratio covenant until (and including) 31 March 2022,
subject to (among other things) the inclusion of a liquidity
covenant, and (b) the deferral of the two term loan amortisation
payments of GBP17.5 million each under the Group's banking
facilities scheduled for 30 November 2020 and 30 November 2021
until the final term loan repayment date (which is currently
scheduled for 17 December 2023) under the Facilities, in each case,
as set out in the Second Waiver Letter entered into between the
Company and its lenders. Under the terms of the Second Waiver
Letter, to the extent that any of the Group's insurance claims
under its event cancelation policies in respect of Outbreak related
cancelations are successful, the Group will be required to apply
the net proceeds of any such successful insurance claim to reduce
the Group's bank indebtedness.
The principal terms of the Waiver Letters are summarised in
paragraph 8.2 of Part X (Additional Information) of the
Prospectus.
Reasons for the Rights Issue
The postponement of a significant number of events, some to
dates outside of the current financial year, and the cancellation
of other events, including Groceryshop MITT and MosBuild which are
among the Group's largest events, has already had a material
adverse impact on the financial position of the Group as described
in more detail above.
In the context of the Outbreak and the possibility of a
prolonged period of extensive disruption to the events industry
across multiple geographies, the Board has carried out stress
testing in order to ascertain the liquidity requirements of the
business over the near and medium term.
Due to the ongoing uncertainty of the situation, this scenario
analysis has been based on the Directors' reasonable worst case
scenario assumptions. While the length and extent of the business
disruption arising from the Outbreak cannot be definitively gauged
at this stage, the Directors believe that an equity fundraise of
approximately GBP126.6 million in gross proceeds will provide
sufficient working capital to allow the Company to weather this
period of disruption.
The quantum of the Rights Issue has been arrived at based on the
cash requirement implied by a reasonable worst case scenario which
assumes:
-- None of the Group's events take place until 1 January 2021,
with the exception of ChinaCoat, its 50 per cent. owned
joint venture event due to take place in December 2020,
five domestic Chinese events due to take place during summer
2020 and one domestic Chinese event due to take place in
November 2020.
-- All other events currently scheduled to take place prior
to 30 September 2020 are assumed to be cancelled while events
that were originally scheduled to take place, prior to the
Outbreak, in the three month period ending 31 December 2020
are postponed until later in FY 2021.
-- As a result, revenue for FY 2020 is expected to be below
expectations prior to the Outbreak by approximately 60 per
cent. and approximately 55 per cent. below revenue for FY
2019.
-- Revenue for FY 2021 is below expectations prior to the Outbreak
by approximately 30 per cent. and below revenue for FY 2019
by approximately 10 per cent., on the assumption that the
global economic backdrop will take some time to stabilise
and sales cycles will be reduced.
While management currently expects that the disruption caused by
the Outbreak may begin to normalise in the coming months, as
evidenced in the scheduled resumption of certain trade events in
China from the end of April onwards, including the Hunan Auto Show
which opened on 30 April, (which is not organised by the Group) and
one of the Group's venues in Asia (the Shanghai New International
Expo Centre) planning to hold events from July or August, with
Italyalso stating that some exhibition venues may reopen from
mid-May, the Directors have considered it prudent to ensure
contingency for a more prolonged period of disruption as envisaged
by the reasonable worst case scenario set out above.
The Rights Issue will give the Group the time and flexibility to
overcome the challenges posed by the Outbreak even under the
reasonable worst case scenario and the Directors believe, will set
the business on a firm footing for the future as the global economy
and its markets recover. The Directors believe that the Rights
Issue will allow the Group to protect its Core Events, customers,
colleagues and communities for the long term, lifting a significant
weight of uncertainty from all stakeholders. The Directors continue
to believe that the underlying foundations of the business remain
strong and that its strategy of focusing on market-leading events
is the correct one and that this will be borne out when this
unprecedented period passes. The Rights Issue will reduce the
Group's indebtedness and the Directors would expect the net debt to
12 month forward looking EBITDA ratio to return to below 2x by
December 2021. Following completion of the Rights Issue, pro forma
adjusted net debt as at 31 March 2020 would be GBP40.4 million
(excluding lease liabilities).
However, if the Rights Issue were not to proceed, it is likely
that the Group will have insufficient working capital to continue
trading as a going concern, which will likely result in the
appointment of administrators or a liquidator at some point between
the failure of the proposed Rights Issue and 30 September 2020, at
which point Shareholders would lose all or a significant part of
the value of their investment in the Company.
CURRENT TRADING AND PROSPECTS
The recent Outbreak has negatively impacted economic conditions
and customer demand globally and, as a result, the Group's
operations, financial performance and prospects have been
materially negatively affected. The substantial majority of events,
from the kind of events the Group offers to sporting and other
large entertainment events, that were scheduled to take place
through to the Reference Date, having been cancelled or postponed
worldwide, with the potential for further
cancellations/postponements over the coming months. In March 2020,
the Outbreak escalated into a global pandemic leading to
unprecedented societal, governmental and personal impacts and
restrictions. Each region in which the Group operates reacted
differently at that stage and, in most instances, governments and
authorities placed certain restrictions on freedom of movement,
travel and on large gatherings in order to contain the spread of
the virus.
As a consequence of the escalation of the Outbreak and the
various consequential restrictions imposed by governments and
authorities on large gatherings, the Group put in place a
large-scale events Postponement plan in many of its markets. Prior
to the Outbreak, the Group had been scheduled to hold 127events in
FY 2020. As a result of the Outbreak, as at the Reference Date, 48
of those events have been postponed, with 30 of those having been
rescheduled to new dates in the current financial year, 18 events
having been rescheduled to new dates outside of the current
financial year and 13 events having been cancelled outright, with
the next iteration of both those events now to occur in FY 2021. By
the beginning of March 2020, the Group had collected approximately
77 per cent. of revenues expected from the 14 postponed or
cancelled events that had been scheduled to occur in March 2020 but
were postponed or cancelled, but since the Group recognises such
revenues only when the event is complete, such revenues have not
been reflected in the Group's financial results for the six months
ended 31 March 2020, while comparable revenues were reflected in
the Group's financial results for the six months ended 31 March
2019. Largely as a result of these postponed and cancelled events,
the Group's revenue reported for the six months ended 31 March 2020
decreased by 10.7 per cent. to GBP96.3 million compared to GBP107.8
million reported for the six months ended 31 March 2019. The Group
reported a statutory loss before tax for the six months ended 31
March 2020 of GBP168.3 million compared to a statutory profit of
GBP1.9 million reported for the six months ended 31 March 2019,
after non-cash impairment charges of GBP166.8 million. The Group's
headline profit before tax for the six months ended 31 March 2020
decreased by 19.2 per cent. to GBP19.8 million compared to GBP24.5
million reported for the six months ended 31 March 2019. A list of
postponed or cancelled events as at the Reference Date is set out
in Part A of Appendix II of the Prospectus.
As at the Reference Date, the restrictions on freedom of
movement, travel and on large gatherings placed by governments and
authorities across the world continue in many markets where the
Group's events are due to be held the current FY 2020. The Group
has not postponed or cancelled 15 events which are due to be held
in the current FY 2020. However, if such measures continue, the
Group expects that it would have to cancel or postpone some or
potentially all of such events, which will have an additional
material negative impact on its operations and financial results
for FY 2020. The Group expects that, without postponing or
cancelling the events that remain scheduled to be held in the
current FY 2020 under the Postponement Plan, its revenue for FY
2020 will decrease by approximately 20 per cent. compared to the
GBP220.7 million reported for FY 2019. If the Group would have to
postpone or cancel its 15 events scheduled to be held in the
current FY 2020, it expects that its revenue for FY 2020 will
decrease by at least 55 per cent. compared to the GBP220.7 million
reported for FY 2019.
To mitigate the impact of the cancelled and postponed events on
the Group's results of operations, the Group has been implementing
a number of cost cutting measures, such as commencing a
consultation process in relation to potential redundancies, a
freeze on recruitment and the termination of the contracts of
temporary employees, moving much of the UK workforce to a four day
week from May 2020, and postponing capital and operating expenses
related to the roll out of the ERP System which was the final
element of the TAG Programme to be implemented. The Group's
cost-saving programme is intended to identify and implement up to
GBP10 million of savings in FY 2020 (approximately GBP9 million of
which from HQ restructuring, non-staff savings and venue savings,
and approximately GBP1 million of which from reduced capital
expenditure) and GBP42 million in FY 2021 (approximately GBP40
million of which from HQ restructuring, non-staff savings and venue
savings, and GBP2 million of which from reduced capital
expenditure).
Although the Outbreak continues to have a material impact on the
events industry as a whole, the Directors believe that face-to-face
exhibitions and events will retain their importance as they
continue to be central to companies in winning new business,
sourcing products, staying up-to-date with industry trends and
finding new ideas and innovations as well as to local and regional
authorities and governments in generating local economic activity
and international trade. The backdrop of the Outbreak is likely to
have a significant impact on smaller operators, and the Directors
believe that over the long term this will serve to increase the
relative attractiveness the Group's market leading events versus
second tier events, as customers prioritise attendance at market
leading shows which the Directors believe deliver a superior return
on investment to customers.
SHARE CONSOLIDATION
The Share Consolidation is proposed in order to achieve a higher
market price for the Consolidated Ordinary Shares and, accordingly,
a more appropriate Issue Price in the Rights Issue.
The Share Consolidation will comprise a consolidation of the
Existing Ordinary Shares under which Shareholders will receive
Consolidated Ordinary Shares on the Consolidation Ratio of one
Consolidated Ordinary Share in substitution for every ten Existing
Ordinary Shares. The nominal value of each New Ordinary Share will
be 10 pence. The Consolidated Ordinary Shares arising on
implementation of the Consolidation will have the same rights as
the Existing Ordinary Shares, including voting, dividend and other
rights. The resolutions approved at the annual general meeting of
the Company held on 23 January 2020 granting authority to the
Directors to allot Ordinary Shares, including on a non pre-emptive
basis, are not affected by the Consolidation since the aggregate
nominal value of the total issued share capital will remain
unchanged following the Consolidation.
The intention is that the market price of a Consolidated
Ordinary Share immediately following the implementation of the
Share Consolidation should be approximately equal to a multiple of
10 times the market price of an Existing Ordinary Share immediately
beforehand. The Consolidation Ratio used for the Share
Consolidation has been set by the Directors after consultation with
the Joint Underwriters. Existing Shareholders will own the same
proportion of the Company as they did immediately prior to the
implementation of the Share Consolidation, subject only to
fractional roundings.
The Closing Price of each Existing Ordinary Share on 6 May 2020
(being the last Business Day prior to the date of this
announcement) was 21.45 pence (as derived from the Daily Official
List of London Stock Exchange plc). In accordance with the
Consolidation Ratio, the Consolidated Closing Price of each
Consolidated Ordinary Share would have been 214.5 pence on that
date.
Subject to the pairing of the first Resolution at the General
Meeting, the Share Consolidation will be made by reference to
holdings of Existing Ordinary Shares on the Company's register of
members as at 6.00 p.m. on 27 May 2020 (or such other time or date
as the Directors may determine). Holdings of Existing Ordinary
Shares in certificated and uncertificated form will be treated as
separate holdings for the purpose of calculating entitlements under
the Rights Issue. Fractions of New Ordinary Shares will not be
allotted to Qualifying Shareholders and fractional entitlements
will be rounded down to the nearest whole number of New Ordinary
Shares. For the purposes of Share Consolidation, it may be
necessary for the Company to issue or repurchase for cancellation
up to 9 additional Existing Ordinary Shares so that the number of
the Company's Existing Ordinary Shares is exactly divisible by
10.
Any fractional entitlements to Consolidated Ordinary Shares
which arise will be aggregated into whole Consolidated Ordinary
Shares and sold in the market on behalf of the relevant
Shareholders. The total proceeds of the sale (net of expenses) will
be paid in due proportion to each of the relevant Shareholders. Any
proceeds of sale (net of expenses) to each of the relevant
Shareholder(s) of less than GBP5.00 will be aggregated and will
accrue for the benefit of the Company.
It is expected that dealings in the Existing Ordinary Shares
will continue until close of business on 27 May 2020 and admission
of the Consolidated Ordinary Shares to the premium listing segment
of the Official List and to trading on the London Stock Exchange's
main market for listed securities will become effective at 8.00
a.m. on 28 May 2020.
SUMMARY OF THE PRINCIPAL TERMS OF THE RIGHTS ISSUE
Pursuant to the Rights Issue, the Company is proposing to raise
GBP126.6 million before expenses and estimated net proceeds of
GBP116.8 million. The Rights Issue is being fully underwritten by
the Joint Bookrunners on, and subject to, the terms and conditions
of the Underwriting Agreement. A summary of the Underwriting
Agreement is set out in paragraph 8.1 of Part X (Additional
Information) of the Prospectus. Subject to fulfilment of, among
other things, the conditions set out below (and, in the case of
Qualifying Non-CREST Shareholders, the Provisional Allotment
Letter), the New Ordinary Shares will be offered to Qualifying
Shareholders on the following basis:
9 New Ordinary Shares at 69 pence each for every 40 Existing
Ordinary Shares
this is equivalent to
9 New Ordinary Shares at 69 pence each for every 4 Consolidated
Ordinary Shares
held and registered in the name of each such Qualifying
Shareholder on the Rights Issue Record Date (and so in proportion
for any other number of Existing Ordinary Shares then held) and
otherwise on the terms and conditions set out in the
Prospectus.
Qualifying Non-CREST Shareholders with registered addresses in
the United States or in any of the other Excluded Territories will
not be sent Provisional Allotment Letters and will not have their
CREST stock accounts credited with Nil Paid Rights, except where
the Company and the Joint Bookrunners are satisfied that such
action would not result in the contravention of any registration or
other legal or regulatory requirement in such jurisdiction.
Holdings of Existing Ordinary Shares in certificated and
uncertificated form will be treated as separate holdings for the
purpose of calculating entitlements under the Rights Issue.
Fractions of New Ordinary Shares will not be allotted to Qualifying
Shareholders and fractional entitlements will be rounded down to
the nearest whole number of New Ordinary Shares.
The Issue Price represents a discount of approximately 67.8 per
cent. to the Consolidated Closing Price on 6 May 2020 (being the
last Business Day prior to the date of the Prospectus) and a 39.0
per cent. discount to the theoretical ex-rights price of 113.1
pence per New Ordinary Share calculated by reference to the
Consolidated Closing Price on the same basis. Upon completion of
the Rights Issue, the New Ordinary Shares will represent
approximately 225.0 per cent. of the Company's Consolidated
Ordinary Shares that will be in issue immediately following the
Share Consolidation and approximately 69.2 per cent. of the
Company's enlarged issued share capital following the Rights Issue.
Qualifying Shareholders who do not take up any of their
entitlements to New Ordinary Shares will experience dilution of
their shareholding by approximately 69.2 per cent. as a result of
the Rights Issue. The above calculations assume that no Ordinary
Shares are issued as a result of the exercise of any options or
awards under the Hyve Share Plans between the Reference Date and
the Rights Issue Record Date. The New Ordinary Shares will, when
issued and fully paid, rank pari passu with the Consolidated
Ordinary Shares and will rank in full for all dividends and
distributions thereafter declared, made or paid on the share
capital of the Company. The New Ordinary Shares may be held in
certificated or uncertificated form.
The Rights Issue is conditional, among other things, upon:
-- the Resolutions being passed by the Shareholders at the
General Meeting without material amendment;
-- the Underwriting Agreement becoming or being declared unconditional
in all respects (save in respect of Admission) and not having
been terminated in accordance with its terms prior to Admission;
-- Admission becoming effective by no later than 8.00 a.m.
on 28 May 2020 (or such later time and/ or date as the Company
and the Joint Bookrunners may determine).
Accordingly, if any of such conditions are not satisfied, or, if
applicable, are not waived, the Rights Issue will not proceed.
Applications will be made for the New Ordinary Shares (nil and
fully paid) to be admitted to the premium listing segment of the
Official List and to trading on the London Stock Exchange's main
market for listed securities, respectively. It is expected that
Admission will become effective, and dealings in the New Ordinary
Shares, nil paid, will commence, at 8.00 a.m. on 28 May 2020.
The Rights Issue will result in up to 183,550,558 New Ordinary
Shares (under ISIN: GB00BKP36R26) being issued (representing, in
aggregate, approximately 225.0 per cent. of the Consolidated
Ordinary Shares that will be in issue immediately following the
Share Consolidation and approximately 69.2 per cent. of the
Enlarged Share Capital, immediately following completion of the
Rights Issue.
The above calculations assume that no Ordinary Shares are issued
as a result of the exercise of any options or awards under the Hyve
Share Plans between the Reference Date and Admission.
Some questions and answers, together with details of further
terms and conditions of the Rights Issue, including the procedure
for acceptance and payment and the procedure in respect of rights
not taken up, are set out in Parts II and IV of the Prospectus and,
where relevant, will also be set out in the Provisional Allotment
Letter.
USE OF PROCEEDS
The Rights Issue is expected to raise, in aggregate,
approximately GBP126.6 million in gross proceeds (approximately
GBP116.8 million net of expenses). The Board intends to use the
proceeds to reduce net indebtedness and provide working capital
flexibility to the Group to allow it to protect the value of its
Core Events which might otherwise be damaged by further cost
savings, over and above those measures already being
implemented.
DIVIDS AND DIVID POLICY
The Board has taken the decision not to pay a dividend for the
current financial year, during which it will continue to invest in
the Group's Core Events.
In addition, the terms of the Second Waiver Letter provide that,
whilst the amendments to the Facilities introduced by the Second
Waiver Letter are in place, the Company is precluded from paying
dividends without obtaining the consent of the majority of the
Group's lenders. Following completion of the Rights Issue, the
payment of dividends by the Company to its Shareholders will
therefore be restricted in accordance with the terms of the Second
Waiver Letter.
The Board understands the importance of optimising value for
Shareholders and it is the Directors' intention to return to paying
a dividend once they believe it is financially prudent for the
Group to do so, following the Group again becoming compliant with
the covenants in the Facilities (prior to their amendment by the
Waiver Letters) and having repaid the deferred loan amortisation
payments.
GENERAL MEETING
A notice convening a general meeting of the Company to be held
at 9.30 a.m. on Wednesday 27 May 2020 at the Company's offices at 2
Kingdom Street, London, England, W2 6JG is set out at the end of
the Prospectus. A Form of Proxy to be used in connection with the
General Meeting will be enclosed with the Prospectus. The purpose
of the General Meeting is to seek Shareholders' approval for the
following resolutions:
-- First Resolution - Authority to effect the Share Consolidation.
The First Resolution is an ordinary resolution authorising
the Directors to implement the Share Consolidation under
which the Company's Existing Ordinary Shares will be consolidated
and re-designated such that Shareholders will receive Consolidated
Ordinary Shares on the Consolidation Ratio of one Consolidated
Ordinary Share in substitution for every ten Existing Ordinary
Shares.
-- Second Resolution - Authority to allot New Ordinary Shares.
The Second Resolution is an ordinary resolution authorising
the Directors to allot New Ordinary Shares and grant rights
in addition to all existing authorities to subscribe for
or convert any security into New Ordinary Shares up to a
nominal amount of GBP18,355,056 in connection with the Rights
Issue. This authority will expire at the Company's next
annual general meeting.
IMPORTANCE OF VOTE
Shareholders are asked to vote in favour of the each of the
Resolutions at the General Meeting in order for the Rights Issue to
proceed. The Directors believe that the successful completion of
the Rights Issue will significantly strengthen the Group's balance
sheet, in particular by providing liquidity support during the
Outbreak, and this will enable the Group to continue as a going
concern.
The Group derives its revenue from the operation of face-to-face
events, a material number of which have now been postponed or
cancelled as a result of the escalation of the Outbreak and the
various consequential restrictions imposed by governments and
authorities on large gatherings and this has had a material impact
on the Group with the further possibility that more events may be
cancelled.
In the event that any of the Resolutions are not passed and the
Rights Issue therefore does not proceed, whilst the Directors would
expend every effort to obtain alternative sources of funding, at
present it is not considered likely that Group would be able to
renegotiate the Facilities, obtain an alternate form of funding or
effect a sale of the whole or part of the Group's business, on
acceptable terms and within the relevant timescales. In addition,
the successful completion of the Rights Issue is a condition to the
Second Waiver Letter becoming effective (and the Facilities being
amended in accordance with its terms). Therefore, if the
Resolutions do not pass and the Rights Issue and the Second Waiver
Letter do not complete, the Company would likely have insufficient
working capital to continue trading as a going concern, which will
likely result in appointment of administrators or liquidator at
some point between the failure of the proposed Rights Issue and 30
September 2020, at which point Shareholders would lose all or a
significant part of the value of their investment in the
Company.
Accordingly, the Directors believe that the Share Consolidation
and the Rights Issue is in the Shareholders' best interests, and it
is very important that Shareholders vote in favour of the
Resolutions so that they can proceed.
RWC European Focus Fund (the Company's largest shareholder) who
currently represents approximately 12.5% of the outstanding
Existing Ordinary Shares has confirmed that it is fully supportive
of the Company's strategy and fundraising proposals and is
intending to vote in favour of the Resolutions to be proposed at
the General Meeting to approve the Rights Issue
RECOMMATION AND INTENTIONS OF DIRECTORS
The Board considers the terms of the Share Consolidation and the
Rights Issue to be in the best interests of Shareholders taken as a
whole. Accordingly, the Board unanimously recommends that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting, as the Directors intend to do in respect of
their own beneficial holdings, amounting in aggregate to 2,740,527
Ordinary Shares, which represent approximately 0.336 per cent. of
the total voting rights in the Company as at the Reference
Date.
All of the Directors who hold Ordinary Shares (Richard Last,
Mark Shashoua, Andrew Beach, Sharon Baylay Nicholas Backhouse and
Stephen Puckett) intend to take up in full their rights to
subscribe for New Ordinary Shares under the Rights Issue in respect
of their holdings. Together these amount to rights to subscribe for
616,617 New Ordinary Shares, representing approximately 0.233 per
cent. of the Company's issued share capital immediately following
completion of the Rights Issue.
HYVE'S STRATEGY & KEY STRENGTHS
The Group has worked intensively over the last three financial
years implementing the TAG Programme to fundamentally transform the
business into one with a global portfolio of market leading events,
leveraging a centralised operating model to deliver a premium
product to exhibitors and attendees. This process has been
underpinned by the Group's vision to create the world's leading
portfolio of content-driven, must-attend events delivering an
outstanding experience and return on investment for its
customers.
The Group remains focused on market leading events, the
application of its centralised operating model and continuous
innovation. This is underpinned by the Group's performance-led
culture and values. Through the TAG Programme, the Group has
invested in its business, resulting in a stronger and more
diversified events portfolio. The events portfolio consisted of 130
events with an average revenue per event of GBP1.7 million as at 30
September 2019 (compared to 269 events and an average revenue per
event of GBP0.5 million as at FY 2017). The Group believes the
investment in its business through the implementation of the TAG
Programme has resulted in a stronger and more diverse events
portfolio with a more balanced geographical footprint. The Group
divides its portfolio into Core Events and Non-Core Events, with
Core Events being those events which management believe can grow
through active investment and become market leading events in line
with the underlying strategy of the TAG Programme and Non-Core
Events being those events for which performance is largely defined
by end market or local conditions and where further investment by
the Group would therefore be less likely to deliver a return. For
FY 2019, Core Events delivered 91 per cent. (GBP200.4 million) of
total Group revenue.
Although the Outbreak continues to have a material impact on the
events industry as a whole, the Directors believe that face-to-face
exhibitions and events will retain their importance as they
continue to be central to companies in winning new business,
sourcing products, staying up-to-date with industry trends and
finding new ideas and innovations. The backdrop of the Outbreak is
likely to have a significant impact on smaller operators, and the
Directors believe that over the long term this will serve to
increase the relative attractiveness of its market leading events,
versus second tier events, as customers prioritise attendance at
market leading shows which the Directors believe deliver a superior
return on investment to customers.
In the current financial year, the Group has continued to evolve
both through organic initiatives and acquisitions. In December
2019, the Group acquired Shoptalk and Groceryshop which are market
leading events in the e-commerce sector based in the United States.
In addition to bringing two historically high growth and profitable
events into the Group's events portfolio, the acquisition has also
given the Group access to their leading Hosted Buyer Programme
which has the potential to be rolled out across a number of other
Group events.
The Outbreak has had a material impact on the Group's near term
operating and financial performance, which the Directors believe is
consistent with other operators in the events industry. In light of
the current and expected impact of the Outbreak, the Group is
implementing a range of cost saving and cash management measures in
order to maximise available liquidity, while focusing on protecting
the prospects of the Group's leading events. The Directors believe
that these measures, together with the completion of the Rights
Issue, will allow the Company to respond to the adverse market
conditions that it is currently facing and that the platform built
by the Group over recent years means that it is strongly positioned
for recovery once this period of dislocation has passed and
economic and market conditions normalise.
The Directors believe that the key elements of the Company's
investment case are:
i. A centralised, product-led operating model
The Directors believe a centralised product-led operating model
allows the Group to operate events to a very high standard across
all of its geographies. Global multinational exhibitors often tend
to prefer engaging with a single events organiser that can cater
for them globally and is able to deliver a consistently high
standard of service across all facets of the event experience.
The Group has created best practice functions and teams both
centrally in its headquarters and in many of its regions.
Investment has been made in event operations for market-leading
events which has contributed to delivering three consecutive years
of organic growth between FY 2017 and FY 2019. In FY 2019, the
Group achieved a significant improvement in its key financial
metrics including statutory revenue growth which, in FY 2019, was
26 per cent. (13 per cent. from Top 10 TAG Events) The Group
achieved an increase in forward bookings to GBP152 million as at 30
September 2019 (GBP147 million as at 30 September 2018) and had an
increase in headline profit before tax to GBP50.4 million for FY
2019 (GBP35.4 million for FY 2018).
The Group has added to the talent and capability within the
business from both the events industry and other sectors and the
Regional and Portfolio Directors have been central to creating a
culture of high performance, reward and recognition. As the TAG
Programme has now largely been completed, the Group now has an
updated IT infrastructure, new CRM and HR systems providing one
source of data, helping to enable increased transparency and
collaboration between the Group's regions and driving standardised
best practice globally. The Group has implemented integrated
technologies which are suitable for scaling across the Group and
employs a cloud first approach and solutions which are applicable
for all significant geographies in which the Group operates. The
Group's technology architecture has been designed so as to enable
the smooth integration of any business acquired by the Group. The
final element of the TAG Programme to be implemented is the Group
wide roll-out of a new ERP System although this has been delayed as
part of the cost saving measures implemented as a result of the
impact of the Outbreak.
ii. A high-quality events portfolio, balanced by geography and sector
The Group has made significant progress in improving the quality
of its portfolio to ensure a focus on events that are either market
leading or have the potential to become market leading within a
particular geography and industry sector. Since it launched the TAG
Programme in May 2017 the Group has sold 65 events (56 of which
were Non-Core Events in Russia) and closed a further 89 Non-Core
Events. This has resulted in a smaller but higher performing
portfolio, which for FY 2019 delivered an average of GBP1.7 million
in revenue per event from 129 events held in FY 2019 (compared to
GBP0.5 million average revenue per event from 269 events in FY
2017) reflecting the change in emphasis to larger events that can
generate higher revenues and have, until the Outbreak, also
reflected sustainable growth.
The benefits of focusing on larger events are demonstrated by
the fact that the Top 10 TAG Events had like-for-like revenue
growth of 13 per cent. in FY 2019 (compared 7 per cent. for the
Group as a whole in the same period) with statutory revenue growth
of 26 per cent. in FY 2019 (13 per cent. from Top 10 TAG Events).
The Top 10 TAG Events also demonstrated strong revenue growth and
improved exhibitor and visitor net promoter scores as a result of
customer service initiatives, a focus on high quality content and
the establishment of a best practice methodology which has been
implemented across multiple events, driving higher volumes of
quality leads for the Group's events teams.
The Group's event portfolio is now more balanced in both
geographic and sector terms, reflecting the change in focus from
events based almost exclusively in emerging markets prior to the
implementation of the TAG Programme to an emphasis on market
leading events irrespective of geography and sector. Although
Russia remains an important geography for the Group, there is now
much less reliance on it due to the diversification of the
portfolio. The portfolio is now much more diversified in terms of
segments and includes events across various geographic locations
including the United States, the United Kingdom and Russia. The
Directors believe that the geographic diversity of the Group should
provide increased resilience to the challenges posed by the
Outbreak as there will be some regions in which the Group operates
which lift restrictions more quickly than others.
The Group continues to review opportunities relevant to its
businesses and portfolio of events, including the consideration of
potential disposals of Non-Core Events or Core Events if the Board
believes a disposal would be beneficial to the Group and could
enable it to strengthen its financial position. For the duration of
the amendments to the Facilities introduced by the Waiver Letters,
in respect of any future disposal by the Group, the terms of the
Waiver Letters will (subject to certain conditions) require the
Group to (a) obtain the prior consent of a majority of the Group's
lenders to certain such disposal and/or (b) apply certain of the
proceeds of such disposal to reduce the Group's bank
indebtedness.
iii. Track record of delivering accretive, product-led acquisitions
In July 2018 the Group acquired Bett, CWIEME, Spring Fair and
Autumn Fair, Pure and Glee through the product-led acquisition of
Ascential Events. In October 2018, the Group also acquired Mining
Indaba. The integration of these acquisitions is now complete, and
Bett, CWIEME, Spring Fair, Autumn Fair and Mining Indaba were each
in the Group's top ten events by revenue in FY 2019.
In December 2019, the Group acquired Shoptalk and Groceryshop, a
product-led acquisition of two market-leading shows focused on the
e-commerce and online grocery subsectors for a total consideration
of $145.3 million (c. GBP110.1 million based on a conversion rate
of GBP1 to $1.32 as at 18 December 2019) on a debt free, cash free
basis. This product-led acquisition of two market leading US events
was consistent with the Group's strategy and enabled the Company to
expand its offering in the high growth end markets of e-commerce
and online grocery. This acquisition was part-funded by a fully
underwritten non pre-emptive placing of Ordinary Shares in the
Company alongside a subscription of Ordinary Shares by the founders
and certain other management shareholders of Shoptalk and
Groceryshop as well as a draw down on the Facilities.
The Group applies a strict criteria and disciplined approach to
its identification of potential acquisition targets. Given the
current market conditions and the likely negative impact that the
Outbreak will have on the Group's results of operations and ability
to make any material acquisitions through the end of the current
financial year and potentially the next, the Group is likely to be
less acquisitive in the near term and the proceeds of the Rights
Issue are not currently intended for acquisitions. In addition, for
the duration of the amendments to the Facilities introduced by the
Waiver Letters, any future third party business acquisitions by the
Group will generally (subject to certain conditions) require the
prior consent of a majority of the Group's lenders, in accordance
with the terms of the Waiver Letters.
Following the resumption of normal market conditions with the
passing of the crisis period of the Outbreak, the Directors believe
the Group will again look to identify acquisition targets with
strong growth prospects.
iv. Opportunity for innovation and optimisation across the portfolio
The Group's scalable operating model, combined with its
selective approach to acquiring best in class events had, until the
market was impacted by the Outbreak, opened up a number of
incremental growth opportunities. These opportunities, which
management expects to reassess in light of market changes. For
example, Shoptalk and Groceryshop have developed an
industry-leading Hosted Buyer Programme, which is underpinned by
bespoke software and includes a platform that facilitates group
meetings among customers for the purposes of engaging in
conversations in relation to pre-defined topics of mutual interest.
Pursuant to the Personatech Licence Agreement, a licence is granted
for the use of the Hosted Buyer Programme software at any Hyve
event.
In addition to the potential to improve existing events, there
are opportunities for taking certain of the Group's leading events
to additional locations throughout the year. Examples of this
include Bett Asia, CWIEME Shanghai and CWIEME Americas with a
significant opportunity for the Shoptalk Europe event going
forward, depending on the constraints on Group resources arising as
a result of the Outbreak.
The Directors believe that the impact of technology on the
events sector will be a prominent feature of market developments in
the coming year as improved analytics tools, digital communication
and other technologies provide opportunities to increase
engagement, drive the creation of better products and advance its
content strategy resulting in improved return on investment for
customers, an enhanced customer experience and strengthening
customer relations. The Group is accelerating its existing plans
for an omni-channel strategy with both online and physical events
forming part of its offering to customers, to further advance the
outstanding experience offered by an event to customers in terms of
return on investment and time as a result of their attendance,
whether physical, virtual or a combination of both.
The Company has already begun to address the trend of virtual
engagement with its customers as seen most recently with the launch
of Shoptalk Virtual Events in April 2020. Shoptalk Virtual Events
are a new set of products that offer ground-breaking content,
connections and community to the entire retail ecosystem. The Group
also intends to launch Shoptalk Online later in 2020 with over
10,000 individuals from leading global consumer and technology
businesses expressing interest in participating.
-- Shoptalk Virtual Conferences: A series of panels, presentations
and interviews that address the most critical challenges
and opportunities in retail today. Conferences are conducted
via livestream video and organised around a single theme,
Shoptalk Virtual Conferences will vary in length but primarily
include half- and full-day events. These conferences are
open for anyone to register to attend.
-- Shoptalk Virtual Tabletalks: Interactive peer-to-peer 45-minute
virtual conversations that enable in depth discussions and
briefings based on specific topics. Shoptalk Virtual Tabletalks
carefully match up to six individuals from retailers and
brands who come together via video conference to share insights,
address issues and generate actionable takeaways. Tabletalks
are interactive, video-based conversations designed for
the purposes of creating new connections. As with those
table talks conducted onsite at Shoptalk's in-person events,
Shoptalk Virtual Tabletalks are invite-only for retailers
and brands. To date, more than 50 Tabletalks have been held
with over 200 participants from leading global consumer
businesses.
-- Shoptalk Virtual Meetings: Video conference-enabled versions
of the Group's Hosted Buyers Programme, Shoptalk Virtual
Meetings will also incorporate the many other networking
and collaboration initiatives traditionally conducted in
connection with Shoptalk's in-person events, creating the
ability for individuals throughout the retail industry to
engage with each other across a wide range of use cases
at scale in distributed and digitally interactive environments.
The Group continues to review its portfolio of events and
advance opportunities for technological engagement with its
customers over the course of the Outbreak and beyond as well as the
advancement of other emergent trends of engagement and
innovation.
The Group is also addressing matters of corporate social
responsibility both at a corporate and event level, using its
events as a platform to advance change in areas of product
sustainability and ethics, as seen in the Pure Power of One
campaign, which the Group has incorporated into its Pure London and
Pure Origin events in 2020 (both of which have now been rescheduled
from July to September 2020) and which aims to encourage
individuals to take steps towards a more sustainable future in the
form of asking them to make individual pledges which are guided by
the UN's Global Goal 12 for Responsible Consumption and Production,
the advancement of entrepreneurial and industry crossover through
the Mining Indaba Young Leaders Programme and sustainability,
recycling and community engagement as seen in the Group's
innovative recycling initiatives at Turkey build's recycling
initiatives.
v. Consistent financial performance
Although the ongoing Outbreak has had, and is expected to
continue to have, a material adverse impact on the Group's current
trading and near term financial performance, the Group has
historically delivered consistent revenue growth over the previous
three financial years. Prior to the Outbreak, the Group had been
consistently cash generative, and it had a headline operating
profit margin of 25 per cent. for FY 2019 (FY 2018: 22 per
cent.).
Over the previous three year implementation of the TAG
Programme, the Group improved its financial performance as well as
certain of its key indicators of operational delivery as set out in
the table below:
For the six months For the financial
ended 31 March year ended 30 September
------------------------ -------------------------- -----
2020 2019
(unaudited) (unaudited) 2019 2018 2017
----------- ----------- ------------ ------------ -----
Revenue (GBPm) 96.3 107.8 220.7 175.7 152.6
Headline profit before tax
(GBPm) 19.8 24.5 50.4 35.4 31.6
Like-for-like revenue growth
(%) 1.0 6.0 7.3 11.4 5.5
Forward bookings (GBPm) 172.0 199.9 152 147 98
The Directors believe that the improved financial and
operational performance show above was driven to a significant
extent by the TAG Programme, although there is no guarantee that
the Group will achieve similar results in the future due to the
uncertain impact that the Outbreak may have on the Group's business
and the wider economy.
IMPORTANT NOTICE
This announcement has been issued by and is the sole
responsibility of the Company. The information contained in this
announcement is for background purposes only and does not purport
to be full or complete. No reliance may or should be placed by any
person for any purpose whatsoever on the information contained in
this announcement or on its accuracy or completeness. The
information in this announcement is subject to change.
This announcement is an advertisement and not a prospectus and
not an offer of Nil Paid Rights, Fully Paid Rights or New Ordinary
Shares for sale in any jurisdiction, including in or into the
United States, Australia, Canada, Japan, South Africa, New Zealand
and any other jurisdiction where the extension or availability of
the Rights Issue (and any other transaction contemplated thereby)
would breach any applicable law (each an "Excluded Territory").
Neither this announcement nor anything contained in it shall
form the basis of, or be relied upon in connection with, any offer
or commitment whatsoever in any jurisdiction. Investors should not
acquire any Nil Paid
Rights, Fully Paid Rights or New Ordinary Shares referred to in
this announcement except on the basis of the information contained
in the Prospectus to be published by the Company in connection with
the Rights Issue.
The Prospectus will be available on the Company's website at
www.Hyve.group later today. Neither the content of the Company's
website nor any website accessible by hyperlinks on the Company's
website is incorporated in, or forms part of, this
announcement.
The distribution of this announcement, the Prospectus, any other
offering or public material relating to the Rights Issue and/or the
Provisional Allotment Letter and/or the transfer of Nil Paid
Rights, Fully Paid Rights and/or New Ordinary Shares through CREST
or otherwise into a jurisdiction other than the United Kingdom may
be restricted by law and therefore persons outside of the United
Kingdom into whose possession this announcement and/or any
accompanying documents come should inform themselves about and
observe any such restrictions. In particular, subject to certain
exceptions, this announcement and the accompanying documents should
not be distributed, forwarded to or transmitted in or into the
United States or any of the other Excluded Territories.
Recipients of this announcement and/or the Prospectus should
conduct their own investigation, evaluation and analysis of the
business, data and property described in this announcement and/or
the Prospectus. This announcement does not constitute a
recommendation concerning any investor's options with respect to
the Rights Issue. The price and value of securities can go down as
well as up. Past performance is not a guide to future performance.
The contents of this announcement are not to be construed as legal,
business, financial or tax advice. Each Shareholder or prospective
investor should consult his, her or its own legal adviser, business
adviser, financial adviser or tax adviser for legal, financial,
business or tax advice.
This announcement is not and does not contain an offer of
securities for sale or a solicitation of an offer to purchase or
subscribe for securities in the United States or any other Excluded
Territory, or any other state or jurisdiction in which such
release, publication or distribution would be unlawful. The
securities to which this announcement relates (the "Securities")
have not been and will not be registered under the U.S. Securities
Act of 1933, as amended (the "US Securities Act"), or under any
securities laws of any state or other jurisdiction of the United
States and may not be offered, sold, taken up, exercised, resold,
renounced, transferred or delivered, directly or indirectly, in the
United States except pursuant to an applicable exemption from, or
in a transaction not subject to, the registration requirements of
the US Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United
States. Subject to certain exceptions, the Securities may not be
offered or sold in any other Excluded Territory or to, or for the
account or benefit of, any national, resident or citizen of such
countries.
Accordingly, subject to certain exceptions, the Rights Issue is
not being made in the United States and neither this announcement,
the Prospectus nor the Provisional Allotment Letters constitute or
will constitute an offer, or an invitation to apply for, or an
offer or an invitation to subscribe for or acquire any Nil Paid
Rights, Fully Paid Rights or New Ordinary Shares in the United
States. Subject to certain limited exceptions, Provisional
Allotment Letters have not been, and will not be, sent to, and Nil
Paid Rights have not been, and will not be, credited to the CREST
account of, any Qualifying Shareholder with a registered address in
or that is located in the United States.
The information in this announcement may not be forwarded or
distributed to any other person and may not be reproduced in any
manner whatsoever. This announcement should not be distributed,
forwarded to or transmitted in or into any jurisdiction where to do
so might constitute a violation of local securities laws or
regulations, including but not limited to (subject to certain
exceptions) the United States and any of the other Excluded
Territories.
This announcement shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor will there be
any sale of these securities (subject to certain exceptions), in
Canada. In Canada, no prospectus has been filed with any securities
commission or similar regulatory authority in respect of the
Securities. No such securities commission or similar regulatory
authority in Canada has reviewed or in any way passed upon the
merits of any proposed offering of the Securities and any
representation to the contrary is an offence.
In Canada. the Securities may be sold only to purchasers
purchasing, or deemed to be purchasing, as principal that are
accredited investors, as defined in National Instrument 45-106
Prospectus Exemptions or, in Ontario, subsection 73.3(1) of the
Securities Act (Ontario), and are permitted clients, as defined in
National Instrument 31-103 Registration Requirements, Exemptions
and Ongoing Registrant Obligations. Any resale of the Securities
must be made in accordance with an exemption from, or in a
transaction not subject to, the prospectus requirements of
applicable securities laws.
Each of Numis, which is authorised and regulated in the United
Kingdom by the FCA, and HSBC and Barclays which are authorised by
the Prudential Regulation Authority (PRA) and regulated in the
United Kingdom by the PRA and FCA, are acting exclusively for the
Company and no one else in connection with the Rights Issue and
will not regard anyone (whether or not a recipient of this
announcement) other than the Company as their respective clients in
relation to the Rights Issue and will not be responsible to anyone
other than the Company for providing the protections afforded to
their respective clients nor for providing advice in connection
with the Rights Issue, or any other matter referred to in this
announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by the Joint Bookrunners or their respective
affiliates or agents as to, or in relation to, the accuracy or
completeness of this announcement or any other information made
available to or publicly available to any interested party or its
advisers, whether written, oral or in a visual or electronic form,
and howsoever transmitted or made available, and any liability
therefore is expressly disclaimed.
In connection with the proposed Rights Issue, the Joint
Bookrunners and any of their affiliates, may in accordance with
applicable legal and regulatory provisions, engage in transactions
in relation to the Nil Paid Rights, the Fully Paid Rights, the New
Ordinary Shares and/or related instruments for their own account
for the purpose of hedging their underwriting exposure or
otherwise. Accordingly, references in the Prospectus to the Nil
Paid Rights, Fully Paid Rights or New Ordinary Shares being issued,
offered, subscribed, acquired, placed or otherwise dealt in should
be read as including any issue or offer to, or subscription,
acquisition, placing or dealing by Numis, HSBC and Barclays and any
of their affiliates acting in such capacity.
The Joint Bookrunners and any of their affiliates may enter into
financing arrangements with investors in connection with which he
Joint Bookrunners and any of their affiliates may from time to time
acquire, hold or dispose of Ordinary Shares. the Joint Bookrunners
do not intend to disclose the extent of any such investment or
transactions otherwise than in accordance with any legal or
regulatory obligations to do so.
Further to any contractual obligations that may be in place
between the Joint Bookrunners, the Joint Bookrunners and their
respective affiliates may, in compliance with applicable law or
regulation, for a limited period coordinate further sales of New
Ordinary Shares following the transaction. Except as required by
applicable law or regulation, the Joint Bookrunners and their
respective affiliates do not propose to make any public disclosure
in relation to such transactions.
INFORMATION TO DISTRIBUTORS
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the "MiFID
II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the Nil Paid Rights, the Fully Paid Rights and the New Ordinary
Shares have been subject to a product approval process, which has
determined that they each are: (i) compatible with an end target
market of retail investors and investors who meet the criteria of
professional clients and eligible counterparties, each as defined
in MiFID II; and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the "Target
Market Assessment"). Notwithstanding the Target Market Assessment,
Distributors should note that: the price of the Nil Paid Rights,
the Fully Paid Rights and/or the New Ordinary Shares may decline
and investors could lose all or part of their investment; the New
Ordinary Shares offer no guaranteed income and no capital
protection; and an investment in the Nil Paid Rights, the Fully
Paid Rights and/or the New Ordinary Shares is compatible only with
investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the offer. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, the Joint Bookrunners will only procure
investors who meet the criteria of professional clients and
eligible counterparties. For the avoidance of doubt, the Target
Market Assessment does not constitute: (a) an assessment of
suitability or appropriateness for the purposes of MiFID II; or (b)
a recommendation to any investor or group of investors to invest
in, or purchase, or take any other action whatsoever with respect
to the Nil Paid Rights, the Fully Paid Rights and/or the New
Ordinary Shares. Each distributor is responsible for undertaking
its own target market assessment in respect of the Nil Paid Rights,
the Fully Paid Rights and/or the New Ordinary Shares and
determining appropriate distribution channels.
Forward-looking statements
Nothing in this announcement is, or should be relied on as, a
promise or representation as to the future. Certain information
contained in this announcement constitutes "forward -- looking
statements", which can be identified by the use of terms such as
"may", "will", "should", "expect", "anticipate", "project",
"estimate", "intend", "continue," "target" or "believe" (or the
negatives thereof) or other variations thereon or comparable
terminology. Due to various risks and uncertainties, actual events
or results or actual performance of the Company may differ
materially from any opinions, forecasts or estimates reflected or
contemplated in this announcement. There can be no assurance that
future results or events will be consistent with any such opinions,
forecasts or estimates. Investors should not rely on such forward
-- looking statements in making their investment decisions. No
representation or warranty is made as to the achievement or
reasonableness of and no reliance should be placed on such forward
-- looking statements. The past performance of the Company is not a
reliable indication of the future performance of the Company. No
statement in this announcement is intended to be nor may it be
construed as a profit forecast. Any investment in the Company is
speculative, involves a high degree of risk, and could result in
the loss of all or substantially all of their investment. Results
can be positively or negatively affected by market conditions
beyond the control of the Company or any other person.
Neither the Company, Numis, HSBC, Barclays or their affiliates
or their respective representatives are under any obligation to
keep current the information contained in this announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUBSVRRKUVRRR
(END) Dow Jones Newswires
May 07, 2020 02:00 ET (06:00 GMT)
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