3rd Nov 2014 07:56
LONDON (Alliance News) - Events marketing and communications services business UBM PLC Monday outlined a new strategy for its Events business, titled "Events First", which it hopes will lead to cost savings starting in 2016 that will build to GBP10 million per year.
UBM said this strategy will drive "profitable growth by focusing its resources on its largest and most profitable shows, increasing its efficiency and effectiveness through the consistent use of standardised systems, and focusing on operational excellence."
The company will rationalise its smaller Events, and exit from some of its "Other Marketing Services" activities that are "not well aligned" to its Events business, UBM said.
UBM said it expects to make investments of around GBP15 million between 2015 and 2017 in developing and rolling out standardised systems, plus associated implementation and rationalisation costs of between GBP15 million and GBP20 million over the same period, booked as operating expenses.
As part of the strategy, UBM also plans to make around GBP25 million to GBP50 million per year in acquisitions for the Events business, with criteria including a return on investment greater than its weighted average cost of capital in the first full year of ownership.
The company will maintain is progressive dividend policy as it implements this strategy, and said its is "targeting a dividend covered two times by adjusted earnings through the cycle".
Meanwhile, UBM said it expects revenues from its PR Newswire business to grow in line with gross domestic product and margins to be stable. For this business, UBM will focus on its global distribution network to support further international expansion.
UBM also said its acquisition of VSS-AHC Consolidated Holdings Corp, known as Advanstar, is expected to close around the year end.
Chief Executive Tim Cobbold said that the Events First strategy will allow it to grow revenue ahead of global gross domestic product in its events business, and provide a basis for medium-term margin expansion.
"Events First recognises that the Events industry is a highly attractive, growing, global industry in which UBM is already a leading player," Cobbold said in a statement. "We have the opportunity to establish UBM firmly as the leading business-to-business events business globally and thereby to create substantial value for shareholders."
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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