ITE Group plc Hikes Dividend By 6%

Shares in international exhibitions group ITE (LSE: ITE) fell as much as 4% in early trading this morning after the company warned the political crisis in Ukraine and sanctions imposed on Russia would likely affect trading for the foreseeable future.

The nature of ITE’s larger biennial exhibitions results in profitability not being comparable in consecutive years. 2014 was a quieter year for the company, with their flagship show Moscow International Oil & Gas not featuring. Timing differences and biennial events resulted in a £3.1m drop in revenues, while Sterling being valued on average 20% stronger than the Ruble also had a significant impact.

When compared to 2012, the last comparable year events-wise, ITE group grew profit from £31.5m to £33.9m and reported a record healine pre-tax profit of £60.3m. The board proposed a final dividend of 4.9p, bringing the full-year dividend for the year to 7.4p, a 6% increase over last year’s dividend. It remains more than twice covered by cash flow from operations, and looks safe.

Management were confident looking forward. Chairman Marco Sodi said:

“ITE remains sensitive to the economic climate in Russia, but has increasingly good growth prospects in its other markets. It continues to generate good cash flow and with a strong balance sheet is well positioned both to benefit from recovery in its core markets and to continue with its strategy of diversifying its business into new markets.”   

The company put some of its cash to work through acquisitions over the period, spending over £50m on three new events. ITE spent £9m to add Beauty Eurasia to its portfolio and a further £1.4m to acquire 90% of Summit Trade Events Limited. A £3m investment got the company a 50% stake in Debindo ITE, which runs the leading construction show in Indonesia, and on the 1st December the Group exercised its call options to acquire the remaining 60% of Scoop International Fashion Limited.

Today ITE announced that a massive £30m was spent on acquiring a 50% stake in Sinostar ITE, which owns ChinaCoat and SFChina, the leading coatings and surface finishing exhibitions in China, further diversifying the group. ITE’s cash position declined from £23.5m net cash to owing net £14.8m.

Of course, it is possible that the true impact of the Russian situation has not filtered through to ITE’s bottom-line this year and shareholders are yet to experience that. However, to me, it appears that all is well operationally at ITE, and we can expect a solid enough year in spite of the political struggles in the Group’s markets. If you aren’t worried about the “Russian Risk” that has knocked shares in the group, now could be a great time to take advantage of market sentiment.

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Zach Coffell has no position in any shares mentioned. The Motley Fool UK has recommended ITE Group. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.