ITE Group plc (lon:hyve)
Hyve – A Rights Issue After All

ITE Group plc Financials

ItemCurrent PeriodPrevious Period
Year20202019
Period6 Months6 Months
Revenue£96m£108m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit(£168m)£2m
Adjusted Profit£20m£24m
Total Debt
Net Debt£157m£109m
ITE Group plc Share Price
Grade:The Orange Grade - Shares That I Think Show Promise With A Few Caveats.
Title: Hyve – A Rights Issue After All
Company: HYVE - ITE Group plc
Share Price Then: 15p
Author: Ian Smith
Date: Tue 12 May 2020
Comments: Hyve have just announced a £127m rights issue along with a share consolidation.

Fully underwritten rights issue of up to 9 New Ordinary Shares at 69 pence each for every 40 Existing Ordinary Shares, equivalent to 9 New Ordinary Shares at 69 pence each for every 4 Consolidated Ordinary Shares

I dislike share consolidations even though they don’t actually do anything, all too often they are a way to hide previous mistakes that hit the share price.

The plan in this case is to do a 10 for 1 consolidation taking the share price to around 150p which would be twice its typical value over the last 5 years and then roughly double the number of shares in circulation bringing it back to a price that the companies share holder’s are used to.

In other words they are hiding a "real" share price of around 7p.

The interim accounts look terrible but they do include £166.8m of non-cash impairments as a result of the coronavirus outbreak.

A £146m of the impairments were Impairment of goodwill £124m and Impairment of intangible assets £42m which seems like a very tidy tax loss for the future.

Post the rights issue it seems likely that the company will be reporting COVID has shut down or reduced attendance at their events for quite a while.

This suggest to me a share price that could easily just drop and drop yet if 2021 starts with all scheduled events taking place then the company seems well placed.

Monitoring the share price along with COVID 19 seems to suggest that there may be a time towards the end of the year where buying would make sense.
Read Count: 269

Buy/No Buy In A Nutshell
NegativesIs the day of the large trade show over? By being forced to cancel events the exhibitors may have found better ways of achieving the same thing.
PositivesI suspect that vanity shows like motor shows with concept cars are finished but more basic events where the cost to operate a stand are more reasonable are not over.
Initial Review Price86p
Last Review Price86p
Last Review Date21-Aug-2020
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Previous Commentaries On ITE Group plc
Date Share Price Author Commentary
Fri 24 Apr 202022pIan Smith

Hyve Group PLC – FTSE 250 Event Organiser.



Hyve Group organisers trade shows, most of the events are genuine trade shows, ones that I have never heard of because they are not in my areas of interest.

They are held world-wide, including in the USA and the UK as well Ukraine, Kazakhstan and Uzbekistan, covering events from health care to pets and fashion and energy

COVID 19 has hit this type of event, The Group has acted quickly to implement a postponement plan, with 33 events being moved to later this financial year, a further 12 events being postponed to FY21 and eight being cancelled.

Historically Hyve focused on emerging markets but in May 2017 the company announced a Transformation and Growth Programme (TAG) which was aimed at reducing the number and increasing the quality of the events that it hosted, this has resulted in a drop from 269 events to 130.

For example in Russia they are now focused on events in Moscow, the bigger events and they sold 56 regional events and closed 17 in Siberia.

In 2017 the company had no events in the UK, in 2019 they had £49m of revenue from UK events.

With 1,200 employees and 17 offices organising 130 events it seems that 2019 was better than 2015-2018 but none of these years produced profit after tax and 2019 was the first year in this period with a pre tax profit.

In this period there have been large adjustments, in 2019 there were £41m of these including £24m of Amortisation of acquired intangible assets.

With about 80% of the company’s revenue coming from the sale of space at the exhibitions they host the company is motivated to make the event as success.

At 24p Hyve Group is back down to the 2008/2009 crash price or the 2004 price prior to that, since then it has been trading in the 50p-100p range, as a company that was floated in 1998.

So if they survive a 2-4 times return seems to be on offer, so will they survive?

On the 14th of April they felt the need to respond to media speculation of a potential equity fundraise and said The options under review include a potential equity fundraise.

They seem to have just over £110m of debt, debt to EBITDA is just under 2 and a current market cap of £193m

These numbers seem to suggest a 1:1 issue at only a small discount to the current price might succeed and if so it would result in a very health reduction in debt as well as provide any needed operating funds.