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ITE to buy seven major events from Ascential

The group plans to raise the capital required for the deal via a rights issue and extension of the debt facility
May 15, 2018

Buying and selling has been a major theme among events companies recently. The complicated web of ownership is a side effect of strategic flight – events groups separate from their former publisher owners and find their niche. “It’s all about products,” said Mark Shashousa, chief executive of ITE (ITE). For example, his company wants to be a global events leader which is why it plans raise money via a rights issue to fund the £300m purchase of seven shows (which have international potential) from Ascential (ASCL). They’re products Mr Shashousa should understand well – he ran them when he was chief executive of Ascential Events.  

IC TIP: Buy at 142p

Having made £78m of revenue in 2017, these events are expected to nearly triple ITE’s top-line to £230m (on a pro-forma basis) in FY2018, while adjusted cash profits could hit £61m, even without the £4m to £5m of annual cost synergies. Management plans to reinvest those savings back into the events to help them become market leaders in their respective fields.

As well as acquisitions, ITE’s quest for worldwide leadership has seen it dispose of Metaltech Malaysia (an event without global potential), while 59 of the less profitable shows have been discontinued. Even so, reported and underlying revenues were up significantly, marking the first time since 2014 that the top line increased in conjunction with punter numbers.

ITE (ITE)    
ORD PRICE:142pMARKET VALUE:£383m
TOUCH:142-144p12-MONTH HIGH:197pLOW: 141p
DIVIDEND YIELD:2.8%PE RATIO:na
NET ASSET VALUE:22p*NET DEBT:61%
Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201769.63.130.61.5
201875.41.28-0.71.5
% change+8-59--
Ex-div:7 Jun   
Payment:2 Aug   
*Includes intangible assets of £142m, or 53p a share