ITE Group plc (lon:hyve)
Hyve – A Rights Issue After All

Hyve Group organisers trade shows, most of the events are genuine trade shows, ones that I have never heard of because they are not in my areas of interest.

They are held world-wide, including in the USA and the UK as well Ukraine, Kazakhstan and Uzbekistan, covering events from health care to pets and fashion and energy

COVID 19 has hit this type of event, The Group has acted quickly to implement a postponement plan, with 33 events being moved to later this financial year, a further 12 events being postponed to FY21 and eight being cancelled.

Historically Hyve focused on emerging markets but in May 2017 the company announced a Transformation and Growth Programme (TAG) which was aimed at reducing the number and increasing the quality of the events that it hosted, this has resulted in a drop from 269 events to 130.

For example in Russia they are now focused on events in Moscow, the bigger events and they sold 56 regional events and closed 17 in Siberia.

In 2017 the company had no events in the UK, in 2019 they had £49m of revenue from UK events.

With 1,200 employees and 17 offices organising 130 events it seems that 2019 was better than 2015-2018 but none of these years produced profit after tax and 2019 was the first year in this period with a pre tax profit.

In this period there have been large adjustments, in 2019 there were £41m of these including £24m of Amortisation of acquired intangible assets.

With about 80% of the company’s revenue coming from the sale of space at the exhibitions they host the company is motivated to make the event as success.

At 24p Hyve Group is back down to the 2008/2009 crash price or the 2004 price prior to that, since then it has been trading in the 50p-100p range, as a company that was floated in 1998.

So if they survive a 2-4 times return seems to be on offer, so will they survive?

On the 14th of April they felt the need to respond to media speculation of a potential equity fundraise and said The options under review include a potential equity fundraise.

They seem to have just over £110m of debt, debt to EBITDA is just under 2 and a current market cap of £193m

These numbers seem to suggest a 1:1 issue at only a small discount to the current price might succeed and if so it would result in a very health reduction in debt as well as provide any needed operating funds.