Mark Shashoua, CEO of ITE Group, talks EN through the company’s interim results and proposed £300m acquisition of the Ascential Events portfolio – which includes Spring and Autumn Fair, Bett, CWIEME, Pure, Glee and BVE.
On the interim results
It was pretty much a year ago that we announced the Transformation and Growth programme (TAG) and today we are demonstrating how much the early initiatives that we rolled out over the past 12 months have really been working. The results are really coming through.
One of the big areas of the TAG programme is what we call ‘creating a scalable platform’. We have heads of best practice who are rolling out blueprints for each activity associated with running an event, and customising it so it’s one way of working across all of our core shows, regardless of geography.
We’ve improved our content, our lead generation and also our customer service. All of that has been rolled out across the core shows. We’ve also been managing the portfolios and have discontinued 59 less profitable shows. Even though we’ve done all that the overall revenues have grown year-on-year.
We have delivered the first like-for-like both yield and volume growth since 2014, and we’ve grown our revenues in the first half by eight per cent.
Even with all of that we’ve reinvested significantly in the business itself to drive all of these initiatives.
Growth is being delivered across most of our markets, whereas last year they were more challenged. We have very strong forward revenue visibility. Our growth rates far exceed local GDP and/or industry GDP. It really is the operational vigour and investments that’s driving it.
Our progress on creating a scalable and managing the portfolio has given us the confidence to go for the third pillar of TAG, which is product-led acquisitions.
On the Ascential Events acquisition
The deal absolutely fits our vision statement of how we want to evolve into a portfolio of market leading events. Regardless of the geographies, it’s all about the product now. As a company we are moving from a de-centralised, geographic-based business to one that is product-led, and with those products we’re open-minded as to where they are in the world, as long as they’re market leading.
We feel that these assets and these shows are incredibly sought-after, they’re all market-leading, all seven brands, of which two are global, which is Bett and Coil Winding (CWIEME). It’s very difficult to find a portfolio that has no tail, and these shows, all of them, are marketing leading.
With this deal we’re tripling our global brands in one fell swoop, and five of the Ascential events will become part of our top ten. We feel there are really clear opportunities for growth.
I used to run that portfolio from 2011-2016, and it’s not just me; a number of the core management team at ITE used to be part of the senior management there.
Ascential, are terrific at what they do, but it’s very clear that these shows have been non-core. They’ve not had the investment, the management focus, the operational rigour that you would expect in a core business.
For us we can see clear opportunities for how to reverse those trends, and put back in the operational rigour and investment in order to drive growth.
The portfolio generates £77.5m of turnover, EBITDA of £24m in 2017, and we believe that we can get a large amount of cost synergies in the region of £4-5m a year, as well as revenue synergies which will come later.
We may be able to get cost synergies of £4-5m, but it’s our plan and intention to reinvest a proportion of those amounts – approx. £2-2.5m – every year back into the business to drive growth.
The combined business on a pro-forma basis is £230m of revenue and £61 of EBITDA before the synergies.
On balancing the geography of the portfolio
Purchasing these wonderful shows gives us a much more balanced portfolio, no only by product but also by geography. But I do want to stress that we’re not doing this deal because we want to reduce our exposure to emerging markets, we’re doing this deal because these are terrific assets that we believe we can grow and which complement our vision going forward.
Many people’s first instinct will be that the only reason we’ve bought it is to get geographic diversification, but it’s not. The main reason we bought these assets is that they are absolutely market-leading shows.
The by-product of this deal is increased geographic diversification, which is always sensible and which makes it a more balanced portfolio.
On the potential growth of the Ascential brands
We feel and we know that we are absolutely on track with our TAG programme, they are already delivering results, and this proposed acquisition gives us an incredibly exciting opportunity to acquire what we consider to be one of the most sought-after assets in the industry.
We believe Spring Fair has the potential to grow, and when we looked at these assets we were aware that some would grow at faster rates than others. The real growth brands are Bett and Coil Winding. There is enormous scope, not only to grow the main events themselves but very much to scale up the geoclones which were never invested in, to really drive the scalability of those geoclones, as well as to bring them into markets where ITE has very strong platforms – Russia, India, Turkey, China.
We are looking to create a world-leading portfolio of market-leading events that deliver an outstanding experience and ROI for our customers – that’s our mission statement. These shows can deliver that.