Interim Results
ITE Group PLC
22 May 2006
22 May 2006
ITE GROUP PLC
INTERIM RESULTS ANNOUNCEMENT
Highlights
Six months ended Six months ended % Change
31 March 2006 31 March 2005
Turnover £26.2m £22.7m 15%
Headline pre-tax profit* £3.7m £3.3m 11%
Reported Profit before tax ** £3.0m £3.2m -7%
Headline diluted earnings per share* 1.0p 0.8p 18%
Diluted earnings per share 0.8p 0.8p -4%
Dividend per share 1.0p 0.9p 11%
• Increase in sales and headline profits reflect strong demand for
emerging market exhibitions
• Turnover up 15%
• Headline profit before tax of £3.7m up 11%
• Headline diluted earnings per share up 18%
• Forward sales up 12%+ on a like for like basis
• Board are confident of prospects for the full year
Commenting on the results, Iain Paterson, Chairman, said:
'The Group reported another strong financial and trading performance. The
results demonstrate our ability to grow our core business, to launch new events
successfully and to develop acquired events.
ITE has built a strong presence in its core markets and we are well positioned
to deliver further growth in the future. The second half has progressed well and
is in line with our expectations. As a result, the Board remains confident of
the prospects for the 2006 financial year.'
* Headline pre-tax profit is defined as profit before tax, amortisation of
intangible assets arising on business combinations and impairment of goodwill
and intangible assets and profits or losses arising on disposal of group
undertakings - see the Profit and Loss Account for details
Headline diluted earnings per share is calculated using profit before
amortisation of intangible assets arising on business combinations and
impairment of goodwill and intangible assets and profits or losses arising on
disposal of group undertakings.
** Reported profit before tax of £3.0m (2005: £3.2m) is after amortisation
charges of £0.7m (2005: £0.1m). Net interest receipts for the first six months
were £0.2m (2005: £0.9m) on cash balances reduced by the £30m share buyback made
in August 2005
Enquiries:
Ian Tomkins ITE Group plc 020 7596 5000
Charles Palmer/Tim Spratt Financial Dynamics 020 7831 3113
Interim Statement
ITE has delivered a positive set of trading results for the first six months of
the financial year. Turnover grew 15% to £26.2m (2005: £22.7m) and headline
profit before tax rose 11% to £3.7m (2005: £3.3m). Reported pre-tax profit for
the six months was £3.0m (2005: £3.2m).
Demand for ITE Group's exhibitions and conferences remained strong throughout
the period, reflecting growing interest in ITE's core markets. The Group has
continued to implement its strategy of supporting the core business with long
term agreements with key venues. In October 2005 the Group advanced $10m
against future tenancy payments to the Moscow venue, Crocus, as part of a long
term agreement. Other venue prepayments made in the first six months were $2m
made to the IEC venue in Kyiv to support the construction of Phase III of its
venue, and $0.6m of a total $1.5m advance to the Atakent venue in Almaty,
Kazakhstan to support the further expansion of available venue facilities.
These venue expansion plans will assist the Group's growth opportunities in
these regions.
Board and Management
Malcolm Wall joined the Board as a non - executive Director on 4 May 2006.
Malcolm brings senior board level experience and extensive knowledge of the
international B2B media sector. He is a member of the Audit, Remuneration and
Nomination Committees of the Board.
As previously announced Marco Sodi, the remaining appointee of Veronis Suhler
Stevenson resigned from the Board on 23 January 2006, following the sale of
Veronis Suhler Stevenson's residual shareholding in ITE Group plc.
Dividend
The Board has approved an interim dividend of 1.0p per share (2005: 0.9p). The
dividend reflects the Board's policy of progressively increasing the dividend in
line with underlying earnings growth.
International Financial Reporting Standards
The results for the six months to 31 March 2006 are the first that the Group has
published under International Financial Reporting Standards ('IFRS'). The
comparative figures for last year have been re-stated on a consistent basis.
The principal changes affecting the results are the inclusion of a charge for
the cost of share options for employees (share based payments), the replacement
of goodwill amortisation with amortisation of intangible assets and the
application of fair value accounting to certain venue advances and to hedging
instruments.
ITE Group plc released a full statement of its adopted IFRS accounting policies
on 21 March 2006. A copy of the IFRS statement is available on ITE's website:
www.ite-exhibitions.com
Financial Performance
Turnover for the first six months of the year increased 15% to £26.2m (2005:
£22.7m) particularly driven by strong sales in Central Asia and Ukraine, and
supported by the acquisitions made last year in the UK and Ukraine. Gross
margins across the Group are consistent with last year at 38% and gross profit
improved by 16% to £9.9m (2005: £8.6m). The Footwear and BTO AgriHort
acquisitions together accounted for £1.6m of the increase in revenue and £0.7m
of the increase in gross profit for the first half.
Operating profit for the first six months was £2.7m after administrative costs
of £7.3m (2005: £2.3m after administrative costs of £6.3m). Administrative costs
include a charge for amortisation of intangible assets of £0.7m (2005: £0.1m).
Foreign exchange gains or losses included in administrative expense were £nil
for the first six months of this year (2005: £0.4m loss).
Net interest receipts for the first six months were £0.2m (2005: £0.9m). The
decline in interest receipts primarily reflects the Group's £30m share buyback
carried out in August 2005.
The Group's 50% owned associate in Turkey made a loss of £0.1m in the six months
to 31 March 2006 (2005: profit £0.1m). The result reflected the impact of
difficult trading conditions on the textile fabrics event, and the phasing of
the biennial Autoshow event.
At 31 March 2006 the Group had a strong balance sheet with £30.1m of net assets.
Cash at 31 March 2006 was £14.9m, an increase of £1.8m over the first six
months. The Group's cash flow from operations was £17.4m of which £6.8m was
applied in making advances and prepayments to venues.
Trading Highlights & Review of Operations
In the six months to 31 March 2006 ITE organised 52 events (2005: 69 events).
The Group discontinued a number of exhibitions in the ordinary course of
business. Total square metres sold in 2006 were 123,100 (2005: 97,000).
An analysis of the Group's sales and gross profit for the first six months is
set out below. The exhibition business for the first six months increased over
last year's comparable figures by 27% in volume sales and by 15% in revenue.
Square Gross
Metres Revenue Profit
'000 £'m £'m
First half 2005* 97.0 21.9 8.0
Core event net growth 16.4 1. 8 0. 8
Acquisitions 9.7 1. 6 0. 7
123.1 25.3 9.5
Publishing activity - 0.9 0.4
First half 2006 123.1 26.2 9.9
* excludes Publishing activity
Russia
The Group is experiencing strong demand underpinned by the continuing prosperity
of the Russian economy. In the first half Moscow International Travel and
Tourism, TransRussia and Ingredients Russia all delivered good performances.
TransRussia grew by 20% and Moscow International Travel and Tourism recorded a
marginal increase in volume, albeit at a slightly reduced average yield per
square metre. The first half of the reporting year only includes approximately
20% of the Group's total Moscow activity, and the sales performance of the
Moscow business over the first six months was in line with our expectations. The
St. Petersburg based exhibitions saw a small drop in activity level as some
international exhibitors re-focused their participation from the St. Petersburg
events to the larger Moscow shows.
Central Asia
The Central Asia and Caucasus regions have continued their strong growth this
year. The Kazakhstan Oil & Gas Exhibition and Conference, which took place in
October, reported revenue growth of 10% over the previous event. The exhibition
was space constrained in 2005, but will be assisted for the forthcoming Autumn
season by the construction of a new pavilion for October 2006. One highlight of
the first half was the launch of Kazbuild Spring in March which was a resounding
success for a new launch and is indicative of the demand in this sector.
Bakubuild in Azerbaijan was rescheduled from September to October 2005 and made
an increased contribution over its preceding event.
Eastern & Southern Europe
The Kyiv office reported a 30% increase in its volume sales and operating
results for the first six months, in which it holds most of its key events.
Among the highlights of this strong performance was the growth in the
construction event, Kievbuild, which expanded into new space built at the IEC
venue. Kiev AgriHort, the premier international agricultural event acquired
last year, grew well under ITE's stewardship and benefited from the additional
available venue space.
EUF, our wholly owned business in Turkey, has delivered a useful first half,
though ITF, our 50% associate business, has struggled amidst a down-turn in the
Turkish textile industry in the face of competition from the Far East.
Western Europe & UK
The spring MODA event has consolidated its position as the UK's leading fashion
exhibition. The newly acquired Footwear UK show which runs concurrently with
MODA grew from its pre-acquisition level and benefited from re-branding and
enhanced marketing from ITE's magazine publishing division. RAS Publishing
performed well and made an improved contribution to the Group in the first half.
Outlook
April is the busiest month in ITE Group's exhibition season with events
contributing over a third of annual turnover. Major events which have taken
place since 31 March include the building shows, MosBuild and MosBuild+, which
together this year increased by a further 25%, utilising for the first time the
new pavilion 2 at the Crocus venue. The continued strength of the Moscow
exhibition market was also reflected in the other April events with Moscow
International Protection and Security, Expoelectronica and the Moscow
International Boat show all recording double digit growth.
In Moscow, the Group will pursue opportunities presented by the recent increase
in available quality venue space, whilst monitoring and combating the
competition. The Ukraine and Central Asia exhibition businesses are well founded
and expect to continue their growth, fuelled by strong demand and the supply of
additional venue space.
ITE has built a very strong presence in its core markets and is well positioned
to continue to deliver further good growth. As of 18 May 2006, the Group had
booked revenues of £69.5m for the full year. This is in line with our
expectations and currently represents in excess of a 12% increase on a like for
like basis over the same period last year. The second half has progressed well
to date and the Board remains positive and confident of the prospects for the
2006 financial year.
Iain Paterson Ian Tomkins
Chairman Chief Executive
Consolidated Income Statement
Six months to Six months to Year ended 30
31 March 2006 31 March 2005 September 2005
Notes Unaudited Unaudited Audited
£000 £000 £000
Revenue 26,175 22,666 78,547
Cost of sales (16,236) (14,116) (42,552)
__________ __________ __________
Gross profit 9,939 8,550 35,995
Net administrative expenses (6,524) (6,140) (12,532)
before amortisation
Amortisation 1 (733) (140) (378)
Total administrative expenses (7,257) (6,280) (12,910)
__________ __________ __________
Operating profit 2,682 2,270 23,085
Share of associates' operating (71) 92 393
(loss)/profit
Profit on disposal of group - - 221
undertakings
Income from investments 3 641 1,098 2,068
Finance costs (285) (256) (596)
__________ __________ __________
Profit on ordinary activities before 2,967 3,204 25,171
taxation
Tax on profit on ordinary activities (928) (904) (6,781)
__________ __________ __________
Profit for the period 2,039 2,300 18,390
__________ __________ __________
Attributable to:
Equity holders of the parent 2,022 2,300 18,423
Minority interests 17 - (33)
__________ __________ __________
2,039 2,300 18,390
__________ __________ __________
Earnings per share (p)
Basic 4 0.8 0.8 6.7
Diluted 4 0.8 0.8 6.5
__________ __________ __________
The results stated above relate to continuing activities of the Group
Consolidated Balance Sheet
31 March 2006 31 March 2005 30 September 2005
Notes Unaudited Unaudited Audited
£000 £000 £000
Non-current assets
Goodwill 32,705 30,880 32,771
Other intangible assets 5,689 2,162 5,989
Property, plant & equipment 1,234 1,182 1,126
Investments in associates 1,033 1,237 1,410
Venue advances and other loans 3,180 2,698 2,216
Deferred tax asset 1,797 1,209 1,395
___________ ___________ ___________
45,638 39,368 44,907
Current assets
Debtors due within one year 5 29,345 22,643 22,722
Cash and cash equivalents 7 14,852 38,009 13,019
___________ ___________ ___________
44,197 60,652 35,741
Total assets 89,835 100,020 80,648
Current liabilities
Trade and other payables 5 (55,786) (49,859) (43,844)
___________ ___________ ___________
(55,786) (49,859) (43,844)
Non-current liabilities
Provisions for liabilities and (2,369) (2,497) (3,038)
charges
Deferred tax liabilities (1,549) (484) (1,671)
___________ ___________ ___________
(3,918) (2,981) (4,709)
Total liabilities (59,704) (52,840) (48,553)
___________ ___________ ___________
Net assets 30,131 47,180 32,095
___________ ___________ ___________
Capital and reserves
Called-up share capital 2,607 2,887 2,599
Share premium account 558 29,877 38
Merger reserve 2,746 2,746 2,746
ESOT reserve (3,021) (3,580) (3,562)
Profit and loss account 27,030 15,022 30,080
___________ ___________ ___________
Equity attributable to equity 29,920 46,952 31,901
holders of the parent
___________ ___________ ___________
Minority interests 211 228 194
___________ ___________ ___________
Total equity 30,131 47,180 32,095
___________ ___________ ___________
Consolidated Cash Flow Statement
Six months to Six months to Year ended 30
31 March 2006 31 March 2005 September 2005
Notes Unaudited Unaudited Audited
£000 £000 £000
Cash flows from operating activities
Operating profit 2,682 2,270 23,085
Adjustments for:
Depreciation and amortisation 987 364 826
(Decrease)/increase in provisions (22) 738 1,531
__________ __________ __________
Operating cash flows before 3,647 3,372 25,442
movements in working capital
(Increase)/decrease in trade (1,034) 1,569 1,970
receivables
Increase in trade payables 14,767 9,330 1,355
__________ __________ __________
Cash generated from operations 17,380 14,271 28,767
Tax paid (4,352) (4,510) (8,378)
Interest paid (285) (256) (596)
__________ __________ __________
Net cash from operating activities 12,743 9,505 19,793
Cash flow from investing activities
Interest received 409 1,098 2,085
Dividends received from associates 322 437 437
Venue advances and loans (6,782) 440 443
Acquisition of businesses (1,061) (2,347) (5,785)
Purchase of property, plant & (226) (182) (430)
equipment
__________ __________ __________
Net cash used in investing (7,338) (554) (3,250)
activities
Cash flows from financing activities
Dividends paid (4,623) (4,560) (7,088)
Share cancellation - - (30,185)
Net cash flow in relation to ESOT 541 (788) (724)
shares
Proceeds from issue of share capital 510 860 927
__________ __________ __________
Net cash flows from financing (3,572) (4,488) (37,070)
activities
Net increase/(decrease) in cash and 1,833 4,463
cash equivalents (20,527)
Cash and cash equivalents at 13,019 33,546 33,546
beginning of period
__________ __________ __________
Cash and cash equivalents at end of 7 14,852 38,009 13,019
period
__________ __________ __________
Notes
1. The interim results have been prepared in accordance with IFRS that the
directors expect to be applicable as at 30 September 2006. IFRS are
subject to amendment or interpretation by the International Accounting
Standards Board and there is an ongoing process of review and endorsement
by the European Commission. For these reasons, it is possible that the
information for the six months ended 31 March 2005 and the restated
information for the year ended 30 September 2005 may be subject to further
change before its inclusion in the Group's 2006 report and accounts, which
will contain the Group's first complete financial statements prepared in
accordance with IFRS.
The Company adopted IFRS with a transition date of 1 October 2004.
Comparative figures for 2005, which have previously been reported in
accordance with accounting principles generally accepted in the United
Kingdom ('UK GAAP'), have been restated to comply with IFRS. An analysis
of the restatement of the Group's results for the year ended 30 September
2005 and the accounting policies used under IFRS was included in an
announcement published on 21 March 2006 that is available on the Company's
website, www.ite-exhibitions.com.
The Company adopted IAS32 'Financial Instruments: Disclosure and
Presentation' and IAS39 'Financial Instruments: Recognition and
Measurement' prospectively from 1 October 2005. As a consequence of
adopting IAS32 and IAS39, the Company recognised a loss of £500,000 in
equity at that date.
The amortisation charge in these financial statements is from intangible
assets arising on business combinations.
These financial statements do not constitute statutory accounts as defined
by Section 240 of the Companies Act 1985. These interim results were
approved by the Board on 19 May 2006 and copies of this document are being
sent to shareholders. Further copies are available from the Company's
registered office.
2. The results for the year ended 30 September 2005 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. Income from investments
Six months to 31 Six months to 31 Year ended 30
March 2006 March 2005 September 2005
Unaudited Unaudited Audited
£000 £000 £000
Interest receivable from bank deposits 386 1,066 2,002
Interest receivable on advances to venues 18 15 34
Interest receivable on loan to Incheba Praha 5 17 32
Fair value adjustment to venue advances 232 - -
__________ __________ __________
641 1,098 2,068
4. The calculations of earnings per share are based on the following
results and numbers of shares.
Headline diluted Basic and diluted
2006 2005 2006 2005
£000 £000 £000 £000
Profit for the financial period 2,022 2,300 2,022 2,300
Amortisation 733 140 - -
Tax effect of amortisation (158) (42) - -
________ ________ ________ ________
2,597 2,398 2,022 2,300
________ ________ ________ ________
2006 2005
Number of shares ('000) Number of shares ('000)
Weighted average number of shares:
For basic earnings per share 250,710 276,479
Exercise of share options 10,406 8,762
___________ ___________
For diluted earnings per share 261,116 285,241
___________ ___________
Headline diluted earnings per share is intended to provide a consistent measure
of group earnings on a year on year basis. Headline diluted earnings per share
is calculated using profit for the financial year before amortisation and
impairment of goodwill and profits or losses arising on disposal of group
undertakings.
5. Debtors include trade debtors of £13.5m (31 March 2005: £14.6m; 30
September 2005: £17.6m).
Creditors: amounts falling due within one year include deferred income of
£47.4m (31 March 2005: £43.5m; 30 September 2005: £32.2m).
6. Reconciliation of Headline profit before taxation to Profit on
ordinary activities before taxation
Six months to Six months to Year ended 30
31 March 2006 31 March 2005 September 2005
Unaudited Unaudited Audited
£000 £000 £000
Profit on ordinary activities before taxation 2,967 3,204 25,171
Amortisation 733 140 378
Loss on disposal of subsidiary undertakings - - 221
__________ __________ __________
Headline profit before taxation 3,700 3,344 25,770
__________ __________ __________
7. As a result of the capital reduction in July 2005, £4.6m is held in a trust
account, which will be released as certain creditors are paid in full. At
31 March 2006, £0.5m of the cash in trust was expected to be released
within one year.
8. Reconciliation of results for the period to 31 March 2005 from UK
GAAP to IFRS - (unaudited)
UK GAAP Share-based Leases Amortisation
payments
£000 £000 £000 £000
Revenue 22,666 - - -
Cost of sales (14,116) - - -
__________ __________ _________ __________
Gross profit 8,550 - - -
Net administrative (5,924) (243) 27 -
expenses before
amortisation
Amortisation (1,535) - - 1,395
Total administrative (7,459) (243) 27 1,395
expenses
__________ __________ _________ __________
Operating profit 1,091 (243) 27 1,395
__________ __________ _________ __________
Share of associates' 294 - - 76
operating profit
Income from investments 1,098 - - -
Finance costs (256) - - -
__________ __________ _________ __________
Profit on ordinary 2,227 (243) 27 1,471
activities before taxation
Tax on profit on ordinary (1,077) - - -
activities
__________ __________ _________ __________
Profit for the period 1,150 (243) 27 1,471
__________ __________ _________ __________
Attributable to:
Equity holders of the 1,150 (243) 27 1,471
parent
Minority interests - - - -
__________ __________ _________ __________
1,150 (243) 27 1,471
__________ __________ _________ __________
Earnings per share
Basic 0.4 (0.1) - 0.5
Diluted 0.4 (0.1) - 0.5
__________ __________ _________ __________
Associates Tax Adjustment Deferred tax IFRS
£000 £000 £000 £000
Revenue - - - 22,666
Cost of sales - - - (14,116)
__________ __________ _________ __________
Gross profit - - - 8,550
Net administrative - - - (6,140)
expenses before
amortisation
Amortisation - - - (140)
Total administrative - - - (6,280)
expenses
__________ __________ _________ __________
Operating profit - - - 2,270
__________ __________ _________ __________
Share of associates' (278) - - 92
operating profit
Income from investments - - - 1,098
Finance costs - - - (256)
__________ __________ _________ __________
Profit on ordinary (278) - - 3,204
activities before taxation
Tax on profit on ordinary 278 (328) 223 (904)
activities
__________ __________ __________ __________
Profit for the period - (328) 223 2,300
__________ __________ _________ __________
Attributable to:
Equity holders of the - (328) 223 2,300
parent
Minority interests - - - -
__________ __________ _________ __________
- (328) 223 2,300
__________ __________ _________ __________
Earnings per share
Basic - (0.1) 0.1 0.8
Diluted - (0.1) 0.1 0.8
__________ _________ _________ _________
Reconciliation of Balance Sheet at 31 March 2005 from UK GAAP to
IFRS - (unaudited)
UK GAAP Leases Intangible Amortisation Deferred tax
assets
£000 £000 £000 £000 £000
Fixed assets
Goodwill 30,459 - (1,590) 1,534 477
Other intangible assets 85 - 2,217 (139) -
Property, plant & 1,808 - (627) - -
equipment
Investments in associates 1,161 - - 76 -
Venue advances and other 2,698 - - - -
loans
Deferred tax asset 251 - - - 958
_________ _______ _________ _________ _________
36,462 - - 1,471 1,435
Current assets
Debtors due within one 22,643 - - - -
year
Cash and cash equivalents 38,009 - - - -
_________ _______ _________ _________ _________
60,652 - - - -
Total assets 97,114 - - 1,471 1,435
Current liabilities
Trade and other payables (51,953) - - - -
_________ _______ _________ _________ _________
(51,953) - - - -
Non-current liabilities
Provisions for liabilities (1,749) (748) - - -
and charges
Deferred tax liabilities - - - - (484)
_________ _______ _________ _________ _________
(1,749) (748) - - (484)
Total liabilities (53,702) (748) - - (484)
_________ _________ _________ _________ _________
Net assets 43,412 (748) - 1,471 951
_________ _______ _________ _________ _________
Capital and reserves
Called-up share capital 2,887 - - - -
Share premium account 29,877 - - - -
Merger reserve 2,746 - - - -
ESOT reserve (3,580) - - - -
Profit and loss account 11,254 (748) - 1,471 951
_________ _________ _________ _________ _________
Equity attributable to 43,184 (748) - 1,471 951
equity holders of the
parent
_________ _______ _________ _________ _________
Minority interests 228 - - - -
_________ _______ _________ _________ _________
Total equity 43,412 (748) - 1,471 951
_________ _______ _________ _________ _________
Holiday pay Dividends Tax Adjustment IFRS
£000 £000 £000 £000
Fixed assets
Goodwill - - - 30,880
Other intangible assets - - - 2,163
Property, plant & equipment - - - 1,181
Investments in associates - - - 1,237
Venue advances and other loans - - - 2,698
Deferred tax asset - - - 1,209
_______ _______ _________ _________
- - - 39,368
Current assets
Debtors due within one year - - - 22,643
Cash and cash equivalents - - - 38,009
_______ _______ _________ _________
- - - 60,652
Total assets - - - 100,020
Current liabilities
Trade and other payables (122) 2,544 (328) (49,859)
_______ _______ _________ _______
(122) 2,544 (328) (49,859)
Non-current liabilities
Provisions for liabilities and charges - - - (2,497)
Deferred tax liabilities - - - (484)
_______ _______ _________ _______
- - - (2,981)
Total liabilities (122) 2,544 (328) (52,840)
_________ _________ _________ _______
Net assets (122) 2,544 (328) 47,180
_______ _______ _________ _________
Capital and reserves
Called-up share capital - - - 2,887
Share premium account - - - 29,877
Merger reserve - - - 2,746
ESOT reserve - - - (3,580)
Profit and loss account (122) 2,544 (328) 15,022
_______ _________ _________ _______
Equity attributable to equity holders (122) 2,544 (328) 46,952
of the parent
_______ _______ _________ _______
Minority interests - - - 228
_______ _______ _________ _______
Total equity (122) 2,544 (328) 47,180
_______ _______ _________ _______
Financial Calendar
Interim dividend
Record date 2 June 2006
Payment date 22 June 2006
Final dividend
Record date January 2007
Payment date March 2007
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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