International exhibition and conference organiser Hyve Group plc says it is trading in line with its ‘downside’ scenario but with cost savings above projections and interim insurance payments and a rights issue secured.
The organiser released an update on trading and its continued response to the Covid-19 pandemic, 29 July.
The Group’s Project Fortress task force, which has been leading on all aspects of the impact of the crisis, has taken “swift and decisive action”, the trading statement notes. “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 statement continues.
Although the Group’s postponement plan, set out in May 2020, had events scheduled from August 2020, further events have been subsequently cancelled as a result of continued lockdown and the Group says it is now trading “more in line with its downside scenario, with the expectation that this will continue into FY21”.
The Group has a small number of events still scheduled to take place in FY20, predominantly in China, Russia, Turkey and Ukraine.
Hyve’s cost saving programme, announced in May 2020, aimed to identify and implement up to £9m (US$11.65m) of income statement savings in the current financial year, and £40m in FY21. Cost saving measures taken to date mean the Group now expects to exceed the FY20 savings target by delivering net additional savings of approximately £25m. Hyve says the extra savings have been largely due to successful venue negotiations, the acceleration of redundancy plans and the utilisation of the UK furlough scheme.
The Group adds that is has “good visibility over a significant portion of the FY21 savings target and expects to be in line with forecast”.
Constructive discussions with insurers regarding event cancellation and postponement claims in relation to 20 FY20 events have resulted in a first interim payment of £7.4m. The Group says it has agreed a second payment of £5.5m which would take the 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’s statement says.
The Group says it 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 cost savings and the receipt of insurance proceeds.
The Group says it has sufficient cash reserves to fund business operations for at least the next 12 months at the current cash burn rate, even in the event of there being no further inflows from customers.
The Group says it 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.
Around 15-20% of the operating cost base relates to the direct costs of delivering the Group’s events, the majority of which would not be incurred on cancelled events.
Mark Shashoua, CEO of Hyve Group, says: “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 kick-start 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.”