NEC Group delivers strong message to buyers with improved results
THE NEC Group has made a bold statement regarding its future after delivering an improved set of annual results.
For the financial year to March 31, 2014 revenue rose 1.7% on an underlying basis to £122.8m, which the group said was impressive considering the continued redevelopment of the National Indoor Arena and the absence of a political party conference at the ICC during the year.
Operating profit rebounded 44% to £22.3m, representing underlying growth of 2.3%. This despite flat visitor numbers.
The group’s overall position was boosted by a strong year for its largest division – the National Exhibition Centre – which saw operating profit rise 9.6% to £34.3m.
The total number of events and visitors at group-owned venues remained steady, with event numbers virtually unchanged at 762 (2012/13: 763) and visitors at 3.8m (2012/13: 3.9m).
However, fewer concerts, resulting in declining ticket sales did dent the performance of other parts of the group.
Nevertheless, Paul Thandi, Chief Executive Officer of the NEC Group, said: “Our long-term growth and diversification strategy allied to the gradual recovery of the economy are having a continued positive effect on the NEC Group.
“The financial result reflects a variety of successful initiatives to improve profitability across our businesses, and together with new business wins this creates a good platform for the years ahead.
“The exhibition business has demonstrated its market-leading position by working closely with customers to deliver another excellent result. Forward bookings across all the businesses for the coming years are strong.”
Birmingham City Council placed the group up for sale earlier this year to try and raise revenue to clear some of its mounting financial commitments and Thandi said the results sent out a strong message to potential buyers.
“We are well positioned to realise our true strategic potential under private ownership, while improving our contribution to the local and national economies,” he said.
The group comprises the NEC, LG Arena, International Convention Centre, the National Indoor Arena, catering division Amadeus and ticketing arm, The Ticket Factory.
The improvement to the exhibition business was as a consequence of increases in revenues from existing exhibitions as they grew in size, new shows developed with organisers, together with strong growth in returns from non-event business and the benefits of cost management initiatives.
The Arenas and Ticket Factory business delivered an operating profit of £3.9m, down £1.7m (31%) on the previous year. The result was affected by constraints on venue availability due to the NIA redevelopment, the number of music concerts being down marginally on a very strong year in 2012/13 and a significant fall in the number of comedy events.
The reduced number of arena events resulted in fewer tickets sold by The Ticket Factory. The Ticket Factory was successful in securing a number of new contracts. However, this had an effect on costs as the business invested in improving its technology and building its team to meet the long-term increase in the number of tickets to be issued under the new contracts secured.
Group Convention Centres (incorporating the trading results of The ICC together with fees earned from the contract to provide management services to The Convention Centre, Dublin), reported a £0.7m (20%) decrease in operating profit, which was more than accounted for by the absence of a political party conference in the year.
There was a material reduction in the deficit reported in other business areas of £5.7m, which was largely attributable to losses incurred by Amadeus on the one-off Olympic Park North catering contract in the previous year.
