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Events conspire against ITE

Sanctions on Putin's Russia, combined with the knock-on effect of the oil price slump, continue to weigh on events specialist ITE
December 1, 2015

Full-year figures for ITE (ITE) were consistent with October's trading update, with the negative effects of the weak oil price and currency movements somewhat offset by better cost management. ITE, a specialist exhibition and conference organiser, recorded a 23 per cent fall in operating profit to £32.1m. That was broadly in line with consensus, but the near-term trading outlook remains bleak due to a further deterioration in the group's central Asian markets.

IC TIP: Hold at 150p

ITE has attempted to reduce its dependence on Russia by diversifying geographically. The integration of event portfolios following this year's acquisitions of Breakbulk, Eurasia Rail and Africa Oil Week will accelerate this process. While the diversification strategy proved effective initially, a number of regional currencies have followed the rouble's lead in the wake of the oil price slump, eroding ITE's sales.

The main problem, however, remains political instability in Eastern Ukraine and the consequent western sanctions on Russia. The depreciation of the rouble accounted for the bulk of the £6.5m foreign-exchange loss, and a fall-away in Russian business activity knocked revenue back by a further £12.5m. At least the impact of any sanctions linked to the recent spat between Russia and Turkey "would not be particularly significant" for the group, chief executive Russell Taylor told us.

Broker Numis Securities has reduced its adjusted EPS estimate for the September 2016 year-end from 13.1p to 12.1p, against 15.3p for FY2015.

ITE (ITE)
ORD PRICE:150pMARKET VALUE:£386m
TOUCH:150-158p12-MONTH HIGH:205pLOW: 125p
DIVIDEND YIELD:4.9%PE RATIO:14
NET ASSET VALUE:32pNET DEBT:53%

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201115539.112.86.1
201217240.513.06.5
201319243.914.27.0
201417541.513.87.4
201513631.510.57.4
% change-22-24-24-

Ex-div: 7 Jan

Payment: 8 Feb

*Includes intangible assets of £138m, or 54p a share