Interim Results

ITE Group PLC 03 June 2003 ITE GROUP PLC INTERIM RESULTS ANNOUNCEMENT ITE Group plc, the international exhibitions specialist, today announces interim results for the six months ended 31 March 2003. Highlights: •Turnover: £18.8 million (2002: £18.7 million) •Headline profit before tax and non-recurring items up 144% to £2.2 million (2002: £0.9 million) •Pre-tax profit: £1.2 million (2002: Loss before tax: £7.3 million) •Gross margins improved to 36%, compared with 31% in 2002 •Top ten core events grew by 26% in terms of space sales and 23% in terms of revenue •Strengthening of key venue relationships, including new exclusive contract to December 2007 signed with venue in St Petersburg •Appointment of Russell Taylor as new Finance Director. Additional strengthening of management in Moscow, St Petersburg, Kyiv and Istanbul •Strong start to the second half. Strong forward order book and seven new launches scheduled for the second half of the year •Sensitivity to the US dollar reduced for the 2004 financial year •Interim dividend of 0.5p per share Commenting on the results, Ian Tomkins, Chief Executive, said: 'ITE has completed an encouraging six month period. The focus on our key brands and most profitable markets has been rewarded by strong growth across each of our top five events for the interim period. ITE is well placed to deliver strong results for the full year with the currently buoyant Russian and CIS markets underpinning the Group's future prospects. Our business is well poised for further organic growth and we also see prospects to strengthen our business in the sectors or markets where we specialise.' -Ends- Enquiries: Iain Paterson/Ian Tomkins 020 7596 5000 ITE Group plc David Simonson/Nicola Davidson 020 7606 1244 Merlin Financial Joint Statement of the Chairman and Chief Executive ITE has completed an encouraging six month period. The focus on our key brands and most profitable markets has been rewarded by strong growth across each of our top five events for the interim period. These events represent 75% of our gross profit contribution for the period and reflect the underlying strength of our business in Russia and the CIS. We have pursued an active assessment of ITE's key management and business needs and have successfully made a necessary transition in the management team in Moscow, as well as other management changes in Istanbul, St Petersburg and Kyiv. Such changes will help ITE to manage its business better and to achieve growth in the future. We have looked to strengthen our key venue relationships and during the period we agreed to provide £1.2m of loan funding to our venue partner in Kazakhstan to help construct new and improved venue pavilions in Almaty. We were very pleased to open our spring events in Kyiv in the newly built International Exhibition Centre, which ITE has part funded by loan. Further, ITE provided £1.6m of loans to our venue partner in St Petersburg, Russia, where we are pleased to announce that we have a new exclusive contract to 31 December 2007. Currently we are working closely with our key venue partner in Moscow to strengthen our long standing relationship going forward. ITE is currently considering other proposals to assist venue development and improve the infrastructure in our growth markets to provide the necessary facilities to deliver first class services to our valued customers. We have launched three new profitable events in the interim period and have another seven new launches scheduled for the second half of the year. We have reduced our future sensitivity to the US dollar by re-weighting our sales contracts for the 2004 financial year to be approximately 45% Euro based sales and 30% US dollar based sales (previously 15% and 60% respectively). However, the financial result for the full year to 30th September is sensitive to movements in the US dollar exchange rate. ITE has been actively meeting the challenges of the increasing competition in our key markets. This has become more important in recent times as competitors covet the attractive prospects within the markets in which we specialise. ITE is very well placed to combat such threats given its long established relationships and considerable local office infrastructure. Management Alex Bernstein who has worked with ITE since 1992 has stepped down from the Board. He has made a substantial contribution to ITE in helping to build up the business in Russia and the CIS over the last decade. We are delighted to welcome Russell Taylor who joined the Board as Group Finance Director and Company Secretary on 24 March 2003. He is a Chartered Accountant and his previous experience includes eight years in the exhibition industry as Group Finance Director and Halls Managing Director at the London exhibitions group, Earls Court Olympia. Dividend The Board has approved an interim dividend of 0.5p per share. This will be payable on 18th July 2003 to shareholders on the register as at 13th June 2003. Results Turnover for the first six months of the year was £18.8m (2002 £18.7m) and Headline profit before tax and non-recurring items was £2.2m this year against a comparable £0.9m last year (see note 7). Turnover in the first six months included a strong performance from our core events in Russia where revenues increased overall by 15% over last year's shows. Against this, a number of shows which took place in the first half of 2002 were not repeated this year. As anticipated, re-focusing on our core business has helped to improve profitability with gross margins improving from 31% last year to 36% this year. The rationalisation steps taken last year, together with the absence of any further one-off costs have helped to reduce operating costs before impairment, amortisation and exceptional items by £1.3m (from £6.4m to £5.1m) over the first six months. The improvement in the quality of gross margin together with lower overheads has contributed to an improved operating profit of £0.7m (2002 operating loss after impairment, goodwill and exceptional items of £6.4m). Our associates have made a small contribution in the first six months. The Turkish business has held up well considering the recent conflict in the region and many of its events take place in the second half of the year. The organising and hall owning business in the Czech Republic is however continuing to suffer from the disruption caused by the flooding in Prague last August. Profit before tax for the first six months was £1.2m (2002 Loss before tax £7.3m). Net assets at 31st March were £36.5m (2002 £34.3m) and net cash balances stood at £19.4m (2002 £15.7m). Expenditure on 'acquisitions' in the six months was £1.9m and related to deferred consideration payments due under previous acquisition agreements. Events During the period to 31 March 2003, ITE organised 69 events (2002 70 events). The following events were the top ten contributors to interim profits: Area (sq.m.) Area (sq.m.) -------------- -------------- 2002/2003 2001/2002 ----------- ----------- Moscow International Travel and Tourism 17,400 15,000 Kazakhstan Oil & Gas 5,300 4,500 Ingredients Russia 4,500 2,650 Moda UK Spring 8,950 3,100 Moscow Sports, Boats and Leisure 7,500 5,950 Transrussia 3,700 3,400 International Textile Show (Autumn) - Turkey 12,500 11,350 International Textile Show (Spring) - Turkey 12,100 10,200 Moda Moscow Spring 4,200 3,000 Kievbuild 3,600 4,100 Overall growth in the shows set out above was 26% in terms of space sales and 23% in terms of revenue. In Russia and the CIS our strong market position allied to good economic conditions are supporting good growth across the sectors. The Moscow International Travel and Tourism show held its 10th anniversary and was 16% bigger this year than last year. Other Moscow shows have exhibited similar growth. The Kazakhstan Oil and Gas exhibition also celebrated its 10th anniversary and was our second largest contributor in the interim period complimented by the internationally recognised conference that accompanies it. Moda UK has realised very strong growth in revenue and contribution following its move to bigger exhibition halls. The brand is expanding from its base in Women's fashion to include Menswear and Bridal sections - though the initial growth rate cannot be expected to continue. The Moda brand in Moscow performed well in the spring but is now facing new competition in the market. The two international textile events in Turkey run by our associate have grown to a significant size but do not command the yields of some of the Russian and CIS exhibitions. The core exhibitions for this year are continuing to trade strongly. April is the most important month for the Group with our biggest event, Russia Building Week, having taken place successfully. The two biennial events, Moscow Oil and Gas and Autosalon both fall later on in this years' programme and the forward sales outlook is favourable. Outlook ITE is well placed to deliver strong results for the full year with the currently buoyant Russian and CIS markets underpinning the Group's future prospects. The balance sheet remains strong with net cash balances of £19.4m. Our business is well poised for further organic growth and we see prospects to strengthen our business further in either the sectors or the markets where we specialise. Further, opportunities lie in broadening our product portfolio available to clients. ITE is well positioned to meet the challenges of the future and benefit from its strength as the leading exhibition organiser specialising in emerging markets. Our market share in Russia and the CIS is advantageous in times when growth prospects are lower in more established markets. Ian Tomkins Iain Paterson Chief Executive Officer Chairman Consolidated Profit and Loss Account Six months to Six months to Year ended 30 31 March 2003 31 March 2002 September 2002 Notes Unaudited Unaudited Audited £000 £000 £000 Turnover 18,841 18,662 52,431 Cost of sales (12,062) (12,821) (31,012) __________ __________ __________ Gross profit 6,779 5,841 21,419 --------- --------- --------- Net operating (5,130) (6,396) (12,581) expenses before impairment and goodwill amortisation and exceptional items Impairment charge 3 - (3,939) (6,220) Goodwill (909) (1,024) (1,905) amortisation --------- --------- --------- Exceptional loan - (864) - write off --------- --------- --------- Total operating (6,039) (12,223) (20,706) expenses __________ __________ __________ Operating profit/ 740 (6,382) 713 (loss) --------- --------- --------- Share of associates' 266 (1,445) (1,211) operating profit/ (loss) before goodwill amortisation Goodwill (81) (78) (160) amortisation --------- --------- --------- Share of associates' 185 (1,523) (1,371) operating profit/ (loss) Loss on disposal of - - (476) interest in subsidiary __________ __________ __________ Profit/(loss) on 925 (7,905) (1,134) ordinary activities before interest Interest 320 562 824 receivable Interest payable (14) (2) (95) __________ __________ __________ Profit/(loss) on 1,231 (7,345) (405) ordinary activities before taxation Tax on profit/(loss) (535) (203) (2,350) on ordinary activities __________ __________ __________ Profit/(loss) on 696 (7,548) (2,755) ordinary activities after taxation Minority interests (59) (1) 152 __________ __________ __________ Profit/(loss) for 637 (7,549) (2,603) the financial period Dividends (1,406) - (6,548) __________ __________ __________ Retained loss (769) (7,549) (9,151) ============ ============ ============ Earnings/(loss) per share Basic and diluted 4 0.2p (3.0p) (1.0p) Headline diluted 4 0.6p (1.0p) 2.2p ============ ============ ============ Consolidated Balance Sheet 31 March 2003 31 March 2002 30 September 2002 Notes Unaudited Unaudited Audited £000 £000 £000 Fixed assets Goodwill 30,166 31,904 30,826 Tangible assets 2,025 1,828 2,041 Associates 688 914 612 Other investments 2,537 2,492 2,492 ___________ ___________ ___________ 35,416 37,138 35,971 Current assets Debtors due within one 5 18,333 16,464 18,225 year Debtors due after one 5,875 4,591 4,148 year Cash at bank and in 19,353 15,706 17,693 hand ___________ ___________ ___________ 43,561 36,761 40,066 Creditors: amounts 5 (41,854) (37,615) (38,426) falling due within one year ___________ ___________ ___________ Net current assets/ 1,707 (854) 1,640 (liabilities) ___________ ___________ ___________ Total assets less 37,123 36,284 37,611 current liabilities Creditors: amounts (53) (61) - falling due after more than one year Provisions for (567) (1,879) (1,241) liabilities and charges ___________ ___________ ___________ Net assets 36,503 34,344 36,370 ============= ============= ============= Capital and reserves Called-up share 2,811 2,699 2,778 capital Share premium 31,727 71,388 31,010 account Option reserve 174 274 239 Profit and loss 1,729 (38,624) 2,340 account ___________ ___________ ___________ Equity shareholders' 36,441 35,737 36,367 funds ___________ ___________ ___________ Minority interests 62 (1,393) 3 ___________ ___________ ___________ Total capital 36,503 34,344 36,370 employed ============= ============= ============= Consolidated Cash Flow Statement Note Six months to Six months to Year ended 30 31 March 2003 31 March 2002 September 2002 Unaudited Unaudited Audited £000 £000 £000 Net cash inflow from 6 9,222 4,596 10,393 operating activities Returns on 306 122 1,080 investments and servicing of finance Taxation (1,404) (585) (2,300) Capital expenditure (2,280) (55) (643) and financial investment Acquisitions and (1,919) (4,774) (5,624) disposals Equity dividends (2,660) - (1,623) paid __________ __________ __________ Cash inflow/(outflow) 1,265 (696) 1,283 before management of liquid resources and financing Management of liquid - - 2,300 resources Financing 395 147 155 __________ __________ __________ Increase/(decrease) 1,660 (549) 3,738 in cash in the period ============ ============ ============ Notes 1. The interim results have been prepared on the historical cost basis, are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim results are prepared on the basis of accounting policies set out in the annual financial statements of the Group for the year ended 30 September 2002. 2. The results for the year ended 30 September 2002 have been extracted from the statutory accounts, which have been reported on by the Group's auditors and have been delivered to the Registrar of Companies. The auditors' report was unqualified and did not contain any statement under section 237 (2) or (3) of the Companies Act 1985. 3. In the six months to 31 March 2002, an impairment review resulted in a loss of £3.9m, being a write down of £2.5m in the Group's investment in Intermedia, a £1.0m impairment in relation to the Group's investment in EUF in Turkey and an impairment of £0.4m against the Group's investment in Agentura Triumf in the Czech Republic. 4. Basic, diluted and headline diluted earnings per share have been based on the profit for the financial period divided by the weighted average of the number of shares in issue being 269.8m for the basic earnings per share and the diluted weighted average of the number of shares in issue being 273.0m for the diluted and headline diluted earnings per share. 5. Debtors include trade debtors of £12.6m (31 March 2002: £9.8m; 30 September 2002: £13.8m) which represents amounts billed in advance. Creditors: amounts falling due within one year include deferred income of £32.1m (31 March 2002: £27.2m; 30 September 2002: £24.3m). 6. Reconciliation of operating profit/(loss) to operating cash flows Six months to Six months to Year ended 30 31 March 2003 31 March 2002 September 2002 Unaudited Unaudited Audited £000 £000 £000 Operating profit/(loss) 740 (6,382) 713 Depreciation charges 234 247 449 Amortisation 909 1,024 1,905 Impairment - 3,939 6,220 Loss/(profit) on sale of 40 (22) (69) fixed assets Increase in debtors (1,127) (1,351) (2,776) Increase in creditors 8,426 7,141 3,951 __________ __________ __________ Net cash inflow from 9,222 4,596 10,393 operating activities ============ ============ ============ 7. Headline profit before tax and non-recurring items is stated before amortisation of goodwill, impairment charges and non-recurring items. In the six months to 31st March 2002 non-recurring items comprised redundancy costs of £0.6m, provision for rent and repairs of £0.5m and a provision against irrecoverable loans of £2.1m. 8. Since the previous interim results for the period ended 31 March 2002, the Group has adopted FRS 19, such that deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that than been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. The adoption of FRS 19 has no effect on either the current periods results or the prior periods results. 9. Copies of this document are being sent to shareholders. Further copies are available from the Company's registered office. This information is provided by RNS The company news service from the London Stock Exchange

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