Hyve’s (HYVE) decision to reduce the size of its portfolio and focus on the most lucrative higher-margin events has started to bear fruit, prompting a rise in the operating margin to 25 per cent in its 2019 trading year, up from 22 per cent in FY2018. The group - formerly trading as ITE - sold 56 non-core Russian events and closed another 24 across that country and central Asia.
Revenue was boosted by the acquisition of UK-based Ascential Events and Mining Indaba, the world’s largest mining investment conference, although was still up 7 per cent on a like-for-like basis. That was outstripped by underlying pre-tax profit growth of 16 per cent, thanks in part to a better-than-expected performance from the Africa Oil Week and Breakbulk events. The former increased revenue by 35 per cent, aided by the recovery of the oil price.
Despite a volatile trading environment in Turkey, an improved pricing strategy and the contribution from biennial railway industry exhibition Eurasia Rail mean the country delivered a 5 per cent like-for-like increase in revenue.
However, in the UK, the legacy fashion portfolio continued to decline as challenges within the mid-market part of the industry led to a 9 per cent like-for-like decline in domestic revenue. Management blamed Brexit-related uncertainty, which caused some customers to withhold cash payments until closer to the event dates, and slower cash conversion at the acquired Ascential Events business for a reduction in the cash conversion ratio to 94 per cent of profits from 113 per cent the prior year. Net debt also increased by more than a third, partly due to additional drawn debt to fund the acquisition of the Mining Indaba event.
Broker Peel Hunt forecasts adjusted pre-tax profits of £54.9m and EPS of 5.2p for the year to September 2020, rising to £58.8m and 5.6p the following year.
| HYVE GROUP (HYVE) | ||||
| ORD PRICE: | 82.8p | MARKET VALUE: | £ 614m | |
| TOUCH: | 82.4-82.9p | 12-MONTH HIGH: | 88p | LOW: 55p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 207 | |
| NET ASSET VALUE: | 40p* | NET DEBT: | 35% | |
| Year to 31 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015* | 136 | 31.5 | 6.5 | 4.6 |
| 2016* | 134 | -4.1 | -2.2 | 2.8 |
| 2017 | 153 | -3.2 | -1.9 | 2.5 |
| 2018 | 176 | -3.7 | -1.6 | 2.5 |
| 2019 | 221 | 8.7 | 0.4 | 2.5 |
| % change | +26 | - | - | |
| Ex-div: | 02 Jan | |||
| Payment: | 03 Feb | |||
| *EPS and dividend figures restated to reflect 7-for-4 rights issue of June 2018 | ||||
| **Includes intangible assets of £481m, or 65p a share | ||||
