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Strong results justify ITE

The events group has reported its first like-for-like revenue growth since 2013
November 28, 2017

Bringing the founder’s son back into ITE (ITE) after a 17-year hiatus has had a welcome impact on the top line. In his first set of results as chief executive, Mark Shashousa has been able to report a 5 per cent increase in like-for-like revenues at the group he co-founded in the early 1990s. That was ITE’s first organic growth in four years.

IC TIP: Hold at 177p

This progress is reflective of the new management’s focused strategy. Between 60 and 70 events – which are deemed “core” and contribute roughly 85 per cent of the top line – are set to receive a total of £20m of investment in the next three years under the group’s TAG ('transformation and growth') strategy. Just under a quarter of this spend was deployed in the reported period and it is already having an effect: the group’s top 10 events reported a 15 per cent increase in like-for-like revenues.

But heavy investment has hurt profits. After extracting one-off impairment and amortisation charges, adjusted pre-tax profits fell 26 per cent to £27m. With these costs due to persist in the year to September 2018, broker Numis has forecast pre-tax profits, on its own adjusted basis, of £31.5m, giving EPS of 8.2p (from £31.6m and 8.1p in FY2017). That said, cash generated from operations improved 3 per cent to £42.3m, which helped reduce net debt to £49.7m.

ITE (ITE)    
ORD PRICE:177pMARKET VALUE:£476m
TOUCH:176-177p12-MONTH HIGH:197pLOW: 141p
DIVIDEND YIELD:2.3%PE RATIO:na
NET ASSET VALUE:25p*NET DEBT55%
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201319243.914.27.0
201417541.513.87.4
201513631.510.57.4
2016134-4.1-3.64.5
2017153-3.2-3.14.0
% change+14---11
Ex-div:4 Jan   
Payment:5 Feb   
*Includes intangible assets of £154m, or 57p a share