Cost savings above projections, interim insurance payments and successful rights issue provide strong financial platform to weather COVID-19
Hyve Group plc today announces an update on trading and its continued response to the COVID-19 pandemic.
The Group’s Project Fortress task force, which has been leading on all aspects of the impact of the crisis, continues to take swift and decisive action. We are encouraged to see that a number of markets in which the Group operates are beginning to open. The situation, however, remains fluid with continued travel restrictions and the possibility of further lockdowns.
The Group’s postponement plan, set out in May 2020, had events scheduled from August 2020. Further events were subsequently cancelled as a result of continued lockdown and the Group is now trading more in line with its downside scenario, with the expectation that this will continue into FY21. The Group does, however, currently have a small number of events still scheduled to take place in FY20, predominantly in China, Russia, Turkey and Ukraine. The Group continues to be in close dialogue with customers and venue owners to ensure scheduled events meet our high standards, providing confidence in the safety and value of attending our market leading shows.
The cost saving programme, announced in May 2020, aimed to identify and implement up to £9m of income statement savings in the current financial year, and £40m in FY21.
Following decisive cost saving measures, the Group expects to exceed the FY20 savings target by delivering net additional savings of approximately £25m. This is largely due to successful venue negotiations, the acceleration of redundancy plans and the utilisation of the UK furlough scheme. The Group has good visibility over a significant portion of the FY21 savings target and expects to be in line with forecast.
The Group continues to be engaged in positive and constructive discussions with its insurers regarding event cancellation and postponement claims in relation to 20 FY20 events.
In addition to the first interim payment of £7.4m, the Group is pleased to announce that it has agreed a second payment of £5.5m taking total claims secured to £12.9m.
The insurance cover is subject to the application of policy excesses and a per event limit which varies for each event, with an overall aggregate cap in respect of all insured events to 31 October 2020 of £62m. We will continue to pursue claims under the insurance policies as the event schedule undergoes further changes brought on by COVID-19.
The Group is in a strong financial position to navigate through continued COVID-19 disruption and uncertainty as a result of the successful £126.6m rights issue announced on 7 May, the material FY20 cost savings which were above management expectations, and the receipt of insurance proceeds.
The Group has sufficient cash reserves to fund business operations for at least the next 12 months at our current cash burn rate, even in the event of there being no further inflows from customers.
The cash burn rate includes the benefits of the cost saving programme and all costs of delivering our current schedule of events. The Group would expect to make additional savings if there is a further reduction in the number or scale of events.
Venue costs represent approximately 25% of the operating cost base and the Group continues to engage in proactive dialogue with venues to roll over the costs of postponed shows to new dates. If further events are cancelled the Group would expect to make additional venue savings. A further 15-20% of the operating cost base relates to the direct costs of delivering our events, the majority of which would not be incurred on cancelled events. The extent to which costs and cash burn rate can be further reduced is dependent on the date of cancellation relative to the scheduled event date.
Mark Shashoua, CEO of Hyve Group plc said:
“Since enacting Project Fortress, we have delivered cost savings above our projections and have secured interim insurance payments alongside a successful rights issue, providing a strong financial platform to weather COVID-19.
“While the situation remains fluid, markets across the world are beginning to reopen albeit we remain mindful it may take time for customer confidence to follow. Hyve is playing a leading role, working closely and collaboratively with customers, industry bodies and regional governments to develop best practice and ensure the safe and appropriate return of events so our industry can get back to business and kickstart economies.
“Market-leading events act as a key trading platform for many industries, governments and regional authorities and will play a vital role in reigniting economies. We are proud of the role our market-leading events play as a catalyst for trade and are excited to complement this with enhanced omnichannel capabilities.”
For further information please contact:
Hyve Group plc
Mark Shashoua / Andrew Beach +44 (0)20 3545 9000
Charles Palmer / Emma Hall / Chris Birt / Jamille Smith +44 (0)20 3727 1000
About Hyve Group plc
Hyve Group plc is a next-generation global events business whose purpose is to create unmissable events, where customers from all corners of the globe share extraordinary moments and shape industry innovation. Hyve Group plc was announced as the new brand name of ITE Group plc in September 2019, following its significant transformation under the Transformation and Growth (TAG) programme. Our vision is to create the world's leading portfolio of contentdriven, must-attend events delivering an outstanding experience and ROI for our customers.
Where business is personal, where meetings move markets and where today's leaders inspire tomorrow's.