Interim Management Statement

RNS Number : 4297D

ITE Group PLC

29 January 2015

 

29 January 2015

ITE Group plc

("ITE" or the "Group")

Interim Management Statement

ITE Group plc is today publishing its Interim Management Statement for the period from 1 October 2014 to the date of this announcement, incorporating the Group's first quarter trading period from 1 October 2014 to 31 December 2014. This coincides with the Group's AGM which is being held at 12 noon today. Other than the information contained in this Interim Management Statement there have been no material events or transactions in the period from 31 December 2014 to 29 January 2015.

Trading Update

The Group's trading for the first three months of the financial year was in line with management expectations and largely unaffected by the current economic slowdown in Russia.

The first quarter is the Group's smallest quarter by revenue, although the Group's leading events in India and China, which took place during this period, are not reflected within consolidated revenue as they are operated by associate and joint venture companies. In India ABEC's construction events, which collectively sold over 60,000sqm, performed strongly, showing good revenue growth and the Chinacoat exhibition held in Guangzhou sold over 34,000sqm, 10% ahead of its equivalent event held in November 2012.

Revenue for the three month period to 31 December 2014 was £25.4m (three months to 31 December 2013: £36.3m). This year's first quarter result reflects a weaker biennial pattern than the previous year combined with the full impact of weaker trading in Ukraine resulting from the on-going conflict in the east of the country. On a like-for-like basis (constant currency) revenues for the quarter are 4% behind the comparative period (18% behind on an actual currency basis).

Corporate development

On 2 December 2014, the Group purchased the Eurasia Rail event for €9.4m in cash, €8m of which was paid on completion with the balance due for payment in June 2015. Eurasia Rail is the leading show of its type in Turkey and the surrounding region, taking place annually in Istanbul serving the rolling stock and railway infrastructure industries.

On 23 December 2014, the Group purchased the Breakbulk series of events for $42m in cash, $40m of which was paid on completion with the balance due for payment in January 2016. Breakbulk consists of a global series of leading exhibitions, serving the transport and logistics market for large scale project equipment, which are held annually in Houston, Antwerp, Shanghai, Johannesburg, Istanbul and Sao Paulo. The acquisition increases ITE's presence in the global transportation and logistics sector.

Both of these transactions complement ITE's strategy of acquiring leading events in the Group's key industry sectors, representing progress in achieving the Group's aims to strengthen and expand its operations in sectors with further potential for growth and diversifying the geopolitical risk in our portfolio of events.

Financial position

The Group's balance sheet and operational cash flows remain strong. Following the acquisitions of Eurasia Rail and Breakbulk the Group's net debt as at 23 January 2015 is circa £46m. In total the Group has committed facilities of £80m to 30 June 2018.

 

Outlook

Trading conditions in Russia have deteriorated over the past two months following the fall in oil prices and the consequent fall in the value of the Ruble against international currencies. This has affected both international and domestic exhibitors. In particular events in sectors with a significant exposure to imported products have been more heavily impacted. On a like for like basis, volumes sales in Russia for the full financial year are now running circa 20% behind the prior year, and management is actively taking steps to ensure that trading margins are maintained. Trading conditions in our markets outside of Russia and Ukraine remain positive and especially strong in Asia. The Group's like for like trading volumes (which excludes associates) are now 17% less than this time last year, and like-for-like revenues (constant currency) are 15% behind, which is in line with management's current expectations.

The Group's reported revenues reflect the exchange rates prevalent at the time the events take place, and therefore will be sensitive to the Ruble/Sterling exchange rate over the key trading months of March and April.  Using an exchange rate for Ruble/Sterling of 95 : £1 the Group has contracted £85m of revenues for FY 2015.

The Board continues to monitor the effects of the prevailing economic conditions in Russia but is confident that the Group's strong business operations in Russia are well positioned to weather the crisis. The Group will continue with its successful strategy of diversifying its geographic exposure outside of Russia.

ITE will announce Interim Results for the six month ended 31 March 2015 on Monday 11 May 2015.

Ends

Enquiries:

 
Russell Taylor, Chief Executive Officer, ITE Group plc                         Tel: [phone]

Neil Jones, Chief Financial Officer, ITE Group plc                                 Tel: [phone]

Charles Palmer/Emma Appleton, FTI Consulting                                  Tel: [phone]

James Serjeant, Numis Securities Ltd                                                     Tel: [phone]

 

END

 

 

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