Events firm ITE’s (ITE) restructuring plan is off to a good start as a third quarter update reveals trading in line with expectations and net cash comes in better than anticipated. The shares rise 6.1% to 161.25p in response.
Underlying revenue is up 9% in the three months to 30 June and a 100% of consensus forecast revenue has already been booked, implying scope for the company to do better than expected. The three-year ‘Transformation and Growth’ (TAG) strategic plan outlined in May is progressing as expected.
EARNINGS UPGRADES, DEBT REDUCED
Numis lifts its pre-tax profit and earnings per share forecast for the September 2017 financial year from £29.5m and 8p to £30m and 8.1p respectively, with its net debt estimate slashed from £65m to £54m – the level reported in today’s statement.
As Canaccord Genuity analyst Simon Davies notes the solid showing was underpinned by the group’s Russian operations which took a buffeting in recent years on commodity price weakness.
RUSSIA THE KEY DRIVER
Davies says: ‘The key driver was its major Moscow exhibitions, most notably its largest individual event, Mosbuild, which delivered c.8% volume growth, and some improvements in yield as well. All of its major Moscow events performed well (with volume and pricing growth), although its performance in the Provinces was weaker, and Turkey and India remained problematic.’
ITE is next likely to update the market in early September when there may be further detail on the progress of TAG. The strategy involves £20m of investment and a shift from a decentralised geographic based business to one focused on leading products (exhibitions and events) which can be run in a variety of markets.