- Business in China still slow
- Russian exit hits revenue
Hyve (HYVE) has emerged from one crisis only to stumble across another. The company, which designs and hosts events across the world, was hit predictably hard by Covid-19, when public gatherings ended overnight. Now – when things should be picking up again – its performance is threatened by Russia’s invasion of Ukraine.
In its half-year results, Hyve reported an “almost full return” to its pre-pandemic event schedule, delivering 28 in-person events between October and March and eight “tech-enabled programmes”. An important exception to this trend is China, major parts of which are still under strict lockdown measures. This is not insignificant. Before the pandemic struck, about 12 per cent of Hyve’s revenue came from Asia. In the past six months, however, the region generated less than 1 per cent, helping keep sales significantly below pre-Covid levels.
While management expects demand from China to recover once restrictions have been eased, the situation in Russia looks less fixable. Russia generated almost £17mn of revenue in the six months to 31 March, accounting for over 20 per cent of total sales. However, the invasion of Ukraine prompted the group to abandon its Russian operations, and it has now completed the disposal for a maximum cash consideration of £72mn, wholly structured as an earn-out consideration payable over a 10-year period.
Management says Hyve is consciously moving away from emerging markets and the disposal of its Russian arm aligns with this aim. Quite how it will replace this major source of income remains unclear, however. And achieving the maximum earn-out arrangement must be open to question.
That’s not to say operations in the UK, the US and Europe are not looking promising. Forward bookings are up at £118mn, compared with £28mn last year, and revenue looks to be recovering well. Meanwhile, the group is focusing on “digital transformation ready” sectors which make use of online and in-person events. The acquisitions of 121 Group and Fintech Meetup – both of which deliver online meetings – should bolster this strategy.
The figures aren’t looking great, however. Despite the easing of lockdown restrictions, Hyve has reported a pre-tax loss compared with last year’s profit. (This is partly due to a smaller insurance pay out.) Meanwhile, dividends are still restricted under the terms of waivers agreed with lenders, and management now faces the task of refinancing the group’s debt facilities which expire in December 2023. A cautious hold.
Last IC View: Hold, 118p, 18 May 2021
|ORD PRICE:||88p||MARKET VALUE:||£257mn|
|TOUCH:||87.8-88.9||12-MONTH HIGH:||158p||LOW: 44p|
|DIVIDEND YIELD:||nil||PE RATIO:||na|
|NET ASSET VALUE:||60p*||NET DEBT:||43%|
|Half-year to 31 March||Turnover (£mn)||Pre-tax profit (£mn)||Earnings per share (p)||Dividend per share (p)|
|*Includes intangible assets of £326mn, or 109p a share **Restated|