s.172 Statements

s.172 Statements

The Companies (Miscellaneous Reporting) Regulations 2018 require a number of NEC Group entities to publish a statement explaining how the Directors have given due regard for the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 while performing their duty to promote the success of the Company for the benefit of its members as a whole ("s.172 statement").

Below are the s.172 statements for the Group's entities captured by these Regulations.

The National Exhibition Centre Limited s.172 Statement 2021

Statement by the Directors on performance of their statutory duties in accordance with s172(1) Companies Act 2006

The Board of Directors of National Exhibition Centre Limited have acted in a way that they consider to be most likely to promote the success of the company for the benefit of its members and the wider Group headed by LHTCA Midco Limited, during this challenging, COVID-19 impacted, year ended 31 March 2021. A summary is set out as follows:

(i) The likely consequences of any decision in the long term

The Masterplan sets out our strategy for the NEC campus over the next 15 years. This important strategic document guides our internal decision-making and how we work with our many partners and stakeholders to balance sometimes competing priorities and find mutually acceptable ways forward.

(ii) The interests of employees

Our employees are fundamental to the delivery of our day-to-day operations and the delivery of our Masterplan. The wellbeing and health and safety of our employees is our number one priority, and this has been more important than ever during the year due to the impact of COVID-19 with many employees being furloughed and/or unfortunately being made redundant.

We have supported our employees through engaging in regular communications and providing wellbeing and specific COVID-19 safety advice through both our HR and dedicated Health and Safety team. Both the Board and the company’s senior management receive regular reporting on health & safety matters.

(iii) The need to foster the company's business relationships with suppliers, customers and others

We know that a great customer experience is not only about our facilities but also how our staff and the staff of our partners operate every day to consistently deliver a great service. As the business recovers from COVID-19 we will continue to invest in our people through customer focused training together with reward and recognition for great customer service through our Stars program.

A primary focus will be to reconnect with our visitors. To this end we will continue to leverage the investment in our facilities, including the catering offers and wayfinding and digital signage. We work closely with our business partners across the region, including Resorts World, Birmingham Airport, Birmingham International Railway Station, major corporates, the Chambers of Commerce, government agencies and Solihull and Birmingham local authorities to understand their plans and to make sure that both visitor demand and visitor experiences can be managed for the mutual benefit of all.

We provide a diverse and balanced choice of facilities and services across our venues with something for all customer groups.

Our procurement strategy seeks to segment our supply chain by criticality and level of expenditure so that procurement activities can be focused on delivering best practice supply chain solutions which represent value for money, are innovative and have an emphasis on sustainability and health and safety and deliver outcomes which meet our requirements. Through the delivery of effective procurement, there is also a commitment to creating partnerships with our suppliers. These partnerships have served us well during the pandemic and we are very grateful to those suppliers that agreed to extended payment terms as the company sought to protect its cash position, particularly in the early stages of the pandemic before the company was able to obtain additional cash resources.

We maintain strong relationships with our debt providers which involves the provision of regular business updates. These strong relationships have resulted in our debt providers being in a position to provide us with additional financing when the impact of COVID-19 took effect.

(iv) The impact of the company's operations on the community and the environment

We take our community responsibilities seriously and work closely with key stakeholders, government agencies and local authorities on a wide range of projects and initiatives including Masterplan, High Speed Two programme (HS2) and broader related infrastructure matters. We also take our environmental responsibilities very seriously across all areas such as carbon reduction, water and waste. Managing waste is a key priority and we have implemented an on-site recycling centre that reduces the level and cost of waste going to landfill sites. We are striving continually to become much more carbon efficient and we continue to invest in our infrastructure and systems to drive down our carbon footprint.

(v) The desirability of the company maintaining a reputation for high standards of business conduct

The company is a key contributor of economic generation in the West Midlands Region and it has a high profile and generates significant public interest. This makes it particularly important that the standards of business conduct are maintained at a high standard. This is achieved through a suite of company policies which are regularly reviewed.

(vi) The need to act fairly between members of the company

The relationship between the company and its members is primarily guided by a Shareholder Agreement and the limited number of members also enables each group to be represented on the Board of Directors.

LHTCA Midco Limited s.172 Statement 2021

Statement by the Directors on performance of their statutory duties in accordance with s172(1) Companies Act 2006

The Board of Directors of LHTCA Midco Limited have acted in a way that they consider to be most likely to promote the success of the Group for the benefit of its members as a whole in the decisions taken during this challenging, COVID-19 impacted, year ended 31 March 2021. A summary is set out as follows:

(i) The likely consequences of any decision in the long term

The NEC Masterplan sets out our strategy for the NEC campus over the next 15 years. This important strategic document guides our internal decision-making and how we work with our many partners and stakeholders to balance sometimes competing priorities and find mutually acceptable ways forward.

(ii) The interests of the Group's employees

Our employees are fundamental to the delivery of our day-to-day operations and the delivery of our Masterplan. The wellbeing and health and safety of our employees is our number one priority, and this has been more important than ever during the year due to the impact of COVID-19 with many employees being furloughed and/or unfortunately being made redundant.

We have supported our employees through engaging in regular communications and providing wellbeing and specific COVID-19 safety advice through both our HR and dedicated Health and Safety team. Both the Board and the Group’s senior management receive regular reporting on health & safety matters.

(iii) The need to foster the Group's business relationships with suppliers, customers and others

We know that a great customer experience is not only about our facilities but also how our staff and the staff of our partners operate every day to consistently deliver a great service. As the business recovers from COVID-19 we will continue to invest in our people through customer focused training together with reward and recognition for great customer service through our Stars program.

A primary focus will be to reconnect with our visitors. To this end we will continue to leverage the investment in our facilities, including the catering offers and wayfinding and digital signage. We work closely with our business partners across the region, including Resorts World, Birmingham Airport, Birmingham International Railway Station, major corporates, the Chambers of Commerce, government agencies and Solihull and Birmingham local authorities to understand their plans and to make sure that both visitor demand and visitor experiences can be managed for the mutual benefit of all.

We provide a diverse and balanced choice of facilities and services across our venues with something for all customer groups.

Our procurement strategy seeks to segment our supply chain by criticality and level of expenditure so that procurement activities can be focused on delivering best practice supply chain solutions which represent value for money, are innovative and have an emphasis on sustainability and health and safety and deliver outcomes which meet our requirements. Through the delivery of effective procurement, there is also a commitment to creating partnerships with our suppliers. These partnerships have served us well during the pandemic and we are very grateful to those suppliers that agreed to extended payment terms as the Group sought to protect its cash position, particularly in the early stages of the pandemic before the Group was able to obtain additional cash resources.

We maintain strong relationships with our debt providers which involves the provision of regular business updates. These strong relationships have resulted in our debt providers being in a position to provide us with additional financing when the impact of COVID-19 took effect. This is set out in more detail on page 16 (See LM1).

(iv) The impact of the Group's operations on the community and the environment

We take our community responsibilities seriously and work closely with key stakeholders, government agencies and local authorities on a wide range of projects and initiatives including Masterplan, High Speed Two programme (HS2) and broader related infrastructure matters. We also take our environmental responsibilities very seriously across all areas such as carbon reduction, water and waste. Managing waste is a key priority and we have implemented an on-site recycling centre that reduces the level and cost of waste going to landfill sites. We are striving continually to become much more carbon efficient and continue to invest in our infrastructure and systems to drive down our carbon footprint.

(v) The desirability of the Group maintaining a reputation for high standards of business conduct

The Group is a key contributor of economic generation in the West Midlands Region and it has a high profile and generates significant public interest. This makes it particularly important that the standards of business conduct are maintained at a high standard. This is achieved through a suite of Group policies which are regularly reviewed.

(vi) The need to act fairly between members of the Group.

The relationship between the Group and its members is primarily guided by a Shareholder Agreement and the limited number of members also enables each group to be represented on the Board of Directors.

The relationship between the Group and its members is primarily guided by a Shareholder Agreement and the limited number of members also enables each group to be represented on the Board of Directors.

Additional Reference Information

LM1 – Page 16 of the LHTCA Midco Ltd Financial Statements – Directors’ Report

Going concern

The company is the ultimate UK Group holding company for the Group, that owns the market-leading live events business, the NEC Group, that trades through the National Exhibition Centre Limited. The funding for the Group is managed centrally and the directors believe that it is therefore appropriate to review the prospects for the company based upon the financial position of the Group as a whole.

COVID-19 has had a significant impact on the Group and the wider exhibition, conference and live events industry, with our venues being closed since March 2020 for the majority of the financial year. Following step 4 in the Government’s lockdown easing, our venues reopened on 19 July 2021. A combination of the success of the COVID-19 vaccination programme in the UK and a series of measures that the Group and industry bodies implemented to create safe environments for our customers and visitors to enjoy live events, means that the future now looks more promising. However, it will take some time to build back to pre-pandemic trading levels.

As a direct result of COVID-19, the Group has placed greater focus than usual on its cash position. During the financial year, the Group has significantly reduced its levels of both operating and capital expenditure, which has resulted in a significant reduction in the Group’s level of cash utilisation. A contributing factor to the reduction in operating expenditure, has been the support provided by both the Government’s Coronavirus Job Retention Scheme and the sector specific assistance provided by way of the Business Rates Relief Scheme.

At 31 March 2021 the Group had a cash balance of £100.9m, an increase of £44.8m versus the cash balance of £56.1m as at 31 March 2020. In addition to the £30.0m that the Group drew down from its existing revolving credit facilities on 11 March 2020 as the scale of the pandemic grew, during the year the Group also received an injection of an additional £50.0m of equity from its existing shareholders and borrowed a further £30.0m using The Coronavirus Large Business Interruption Loan Scheme, the details of which are set out in note 25 (See LM2).

The directors have reviewed the future prospects for the Group. This review has been undertaken bearing in mind the impact that COVID-19 has had on both the economy generally and on the industry sector in which the Group operates. As such, in considering the build-back from COVID-19, the Group has assessed its going concern position utilising a modelling assumption, which the directors believe to be a severe, downside case scenario being that the Group does not hold any live events or make any ticket sales in respect of future events for the period to 30 September 2022.

In addition, it has also been assumed that following the termination of the Government’s Coronavirus Job

Retention Scheme on 30 September 2021 and the expiry of the Business Rates Relief Scheme in April 2022, no further support schemes will be available.

Applying these assumptions, together with a number of other assumptions in respect of both the Group’s current and future rates of both operating and capital expenditure, it has been determined that the Group has adequate resources to continue to operate for a period of at least 12 months from the date these Financial Statements were signed.

The directors have also modelled a more extreme downside case scenario and on this basis, the directors have obtained a legally binding letter of support to the Group from The Blackstone Group Incorporated, the ultimate controlling party. The support is in excess of the forecast shortfall of funds even under this extreme downside case scenario.

Having assessed the financial position of the company and considered the wider Group using the evidence available to them, together with the letter of support from The Blackstone Group Incorporated, the directors have a high confidence that the company has adequate resources to continue to operate for a period of at least 12 months from the date these Financial Statements were signed. They have therefore concluded that it is appropriate to prepare these Financial Statements on a going concern basis.

LM2 – Extract from Note 25 of the LHTCA Midco Ltd Financial Statements

Revolving credit facilities

Revolving credit facilities represent the following:

  1. Super senior revolving credit facility of £10m with an interest rate equal to LIBOR plus a margin of 3.25%, repayable 11 July 2021.

  1. Super senior revolving credit facility of £20m with an interest rate equal to LIBOR plus a margin of 3.25%, repayable 14 September 2021.

  1. Coronavirus Large Business Interruption Loan Scheme Facility of £30m with an interest rate equal to LIBOR plus a margin of 2.59%, repayable 30 June 2021.