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  Print      Mail a friend       Annual reports

Tuesday 09 December, 2003


Final Results

09 December 2003

9 December 2003

For Immediate Release

                                 ITE GROUP PLC


ITE Group plc, the leading exhibition organiser in emerging markets, is pleased
to announce its preliminary results for the year ended 30 September 2003.

Key points:

-         Reported turnover of £58.9 million (2002: £52.4 million), up 12.4%
-         Profit before tax of £12.3 million (2002: loss of £0.4 million)
-         Headline pre-tax profit* of £15.5 million (2002: £8.4 million), up
-         Net cash of £22.1 million (2002: £17.7 million), up 24.9%
-         Basic earnings per share of 3.1p (2002: 1.0p loss per share)
-         Headline diluted earnings per share of 4.2p (2002: 2.4p), up 75%
-         Net assets of £41.0 million (2002: £36.4 million), up 12.6%
-         Business focus on strongest, most profitable brands
-         Strong growth in key Moscow market
-         Disposal of non-core investments

Commenting on the results, Iain Paterson, Chairman, said:

'I am pleased to report record results for ITE Group plc which demonstrate the
underlying strength of our business. Turnover at £58.9 million was up 12% on
last year and Headline profit before tax of £15.5 million was up 85% on last
year. The Group has a strong balance sheet and ended the year with net cash of
£22.1 million.

The Group enjoys a leading position in the Moscow, St Petersburg and Central
Asian exhibition markets. We believe that these areas will continue to
experience economic growth thereby underpinning the expansion of our business.
We are opening opportunities for organic growth by taking our existing brands
and core products into new emerging markets. With these strong foundations, we
are confident that we can continue the good financial performance of this year.'

* Headline pre-tax profit is defined as profit before tax, amortisation and
impairment of goodwill and profits or losses arising on disposal of group
undertakings. In the financial highlights of the annual reports for previous
years, Headline profit before tax included profits and losses on disposal of
group undertakings. These have been restated above to more accurately reflect
the group's underlying performance.


Iain Paterson / Ian Tomkins        ITE Group plc            020 7596 5000
Philip Ranger / Kirsty Black       Merlin Financial         020 7606 1244

ITE Group plc

Preliminary statement for the year ended 30 September 2003

Chairman's Statement

Group Performance

I am pleased to report record results for ITE Group plc which demonstrate the
underlying strength of our business. Turnover and Headline Profit before tax for
the year were £58.9 million and £15.5 million respectively. Headline diluted
earnings per share grew by 75% to 4.2p per share and diluted earnings per share
improved to 3.0p per share on Profit before tax of £12.3m compared to a loss of
1.0p per share on a Loss before tax of £0.4m in 2002. The Group has a strong
balance sheet and ended the year with net cash of £22.1 million.

Strategic Progress

We pursued a number of organic growth opportunities during the year, expanding
our portfolio of events in sixteen countries and enhancing our major brands.
Recently ITE has agreed terms with Expocentr, its principal Moscow venue, to
extend the terms of its co-operation agreement covering our key events for a
further five years.

We have continued to focus our business on its most profitable areas of
activity. Since the year-end we have sold all of our interests in the Czech
Republic and Slovakia to Incheba a.s., the owner of the other 50% interest. The
effect of the floods in Prague in August 2002 had shifted the focus of the Czech
business towards investment in and refurbishment of exhibition halls.

Board and Management

There have a number of changes to your Board during the year. Russell Taylor was
appointed Group Finance Director and Company Secretary in March. Russell is a
Chartered Accountant whose previous experience included eight years in the
exhibitions industry. In July, Edward Strachan, Managing Director of our St
Petersburg and Central Asia businesses was appointed to the Board. Edward has
been with the Group for over ten years and now brings his breadth of experience
of our industry to the Board.

Alex Bernstein resigned from the Board in June. Alex had significantly
contributed to building our business in Moscow. Sir Hugh Bidwell, Deputy
Chairman, stepped down from the Board in September after seven years with ITE
and Alexander Rozin resigned from the Board in November following the sale of
our Czech and Slovakian interests. The Board would like to thank these Directors
for their contributions to the development of the Group over the years.

In July, Marco Sodi replaced Jeffrey Stevenson as one of the Non-Executive
Directors nominated by Veronis Suhler Stevenson. Marco is actively involved in
the European media sector. Michael Hartley was appointed a Non-executive
Director in October. Michael is currently Chairman of Dawson International plc
and brings extensive experience of managing and growing internationally
diversified groups of businesses.

In addition to the Board changes, we have streamlined and strengthened our
management team. I should like, on behalf of the Board, to thank all our staff
for the very considerable effort that they have made during the year. We are
particularly appreciative of their support during a period of organisational and
structural change.


The Board has recommended a final dividend of 1.1p per share bringing the total
dividend for the year to 1.6p per share. This represents a real increase of 6.7%
in the annual dividend in line with the Board's progressive dividend policy.


The Group enjoys a leading position in the Moscow, St Petersburg and Central
Asian exhibition markets. We believe that these areas will continue to
experience economic growth thereby underpinning the expansion of our business.
We are opening opportunities for organic growth by taking our existing brands
and core products into new emerging markets. With these strong foundations, we
are confident that we can add value and continue the good financial performance
of this year.

Iain Paterson

Chief Executive's Review

Financial performance

Turnover for the year of £58.9m (2002: £52.4m) and Gross Profits of £26.7m
(2002: £21.4m) reflect both the strength of the markets in which we operate and
the benefits of re-focusing our business on its most profitable areas. Control
of overheads assisted Operating Profits of £11.7m (2002: £6.9m excluding
impairment charges) and an increase in Headline Profit before Tax to £15.5m from
£8.4m last year. This is the stronger year in our biennial trading pattern and
£2.4m of the increase in profits is attributable to events that only take place
every two years.

Revenues are 12% higher than last year, despite the effect of a weakening dollar
on our revenue streams. Circa £4.4m of the increase in revenue is attributable
to our biennial events, Moscow International Oil and Gas and Autosalon. Events
which took place last year and did not recur in 2003 (or were discontinued) and
other timing differences reduced turnover by £4.3m. New launches and growth in
our existing portfolio lifted turnover by £6.4m and profits by £3.6m.

The gross margin achieved of 45% is an improvement on last year's margin of 41%.
The improvement is partly attributable to the margins we earn on the two
biennial events, and partly to the steps we have taken to reduce our cost of
sales and to eliminate less profitable business.

We carried out a review of our operating structure over the summer and the
resulting changes yielded annualised savings of over £1m. The costs of the
restructuring exercise were £0.4m. The cost of severing our relationship with
the Czech and Slovakian exhibition businesses was £0.8m. This included expensing
£0.5m of prepayments in respect of unused tenancies and a loss on disposal of

Our associated company contribution in the year primarily relates to our 50%
owned business in Istanbul, Turkey. The core business sold 150,000 square
metres, but yields are low and profits are depressed by the Turkish Lira, which
is only one third of its February 2001 value against the dollar.

The Group has performed well this year and the results represent a highly
creditable performance. This set of results confirms that our period of
rationalisation and consolidation has been successfully completed and that the
Group is making substantial progress. We have contracted £35m of business for
the 2004 year which is an increase on a like for like basis of 11%.

Trading highlights

In 2003 we organised 114 events in 16 countries (2002: 117 events in 19
countries) and sold a total of 292,000 square metres of space (2002: 255,800
square metres). We launched 19 new events over the course of the year across a
range of industries concentrating on the markets of Kazakhstan, Ukraine and

Like for like growth in space sales of our annually recurring events was in
excess of 14%, led by exceptionally strong results in our key core events. The
top ten events ordered by contribution to gross profit in 2003 and their change
in size over the previous year were:

Rank   Event                                         2003        2002    Growth
                                                net Sq.m.   net Sq.m.

   1   Russia Building Week                        34,600      26,900       28%
   2   Moscow International Travel & Tourism       17,500      15,000       16%
   3   Moscow International Oil & Gas/             14,300       3,400         *
   4   World Food Moscow                           17,500      14,600       20%
   5   Autosalon / MIMS                            22,800      15,600         *
   6   MODA UK (bi-annual)                         20,900      10,800       93%
   7   Kazakhstan International Oil & Gas           5,600       4,500       24%
       (including conference)
   8   Windows & Doors                              8,600       7,400       15%
   9   Moscow International Sports & Boat           7,400       5,800       28%
  10   Ingredients Russia                           4,500       2,600       69%

* 2002 Events not comparable due to biennial pattern

We enjoyed considerable growth in our key market, Moscow, which accounts for up
to 70% of our gross profit. The main influences were the good performance of our
two biennial events and the opening of a new 7,000 net square metre pavilion at
the principal exhibition venue, Expocentr.


Our Russian exhibition business is very well established and enjoyed growth of
25% in both space and revenues. Russia Building Week expanded to fill the newly
built exhibition hall at Expocentr and has further potential to grow, but is
constrained for the time being by the availability of good quality exhibition
space in Moscow. Moscow International Travel and Tourism show and the World Food
Moscow event both enjoyed growth in space sales of more than 15%. Our Oil and
Gas event and Autosalon only take place every two years, but nevertheless both
enjoyed growth of 20% + over their previous editions. Moscow has become an
increasingly competitive environment in recent years and presently continues to
be under-resourced in available exhibition space. However, new space will be
available soon to provide the opportunity to enhance ITE's growth.

The recently signed co-operation agreement with Expocentr is of real
significance to the Group, as it secures our key Moscow events at the leading
Moscow venue of Expocentr for the foreseeable future.

Currently ITE is in new discussions to again further extend the term of our
co-operation with Lenexpo, our principal venue in St. Petersburg, following on
from an agreement made late last year. Our premier events in St Petersburg
remain the Baltic Building Week (8,000 Sq.m.) and Interfood St Petersburg (4,000
Sq.m.). We have recently developed a new theme in St. Petersburg with the
agreement of a joint venture in the food production technology area.

Central Asia

ITE is the leading international operator established in these regions. The
economies in these markets are buoyant, with growth underpinned by strong world
oil and gas prices. In 2003 ITE launched 6 new events in the region, mainly in
Kazakhstan. The launches were in a range of industries including Building,
Fashion, Packaging, Cleaning and Chemicals.

In Kazakhstan, strong growth was developed in the city of Atyrau, where last
year's Infrastructure launch was split into three separate exhibitions, all of
which filled the existing venue capacity. In Almaty we entered into a funding
arrangement to assist our venue partner to build a new exhibition hall, so as to
facilitate growth in our construction and oil and gas events (which both grew by
circa 30%).

Our events in Azerbaijan are showing strong growth from a modest base - in
particular in the medical and construction sectors.

Eastern & Southern Europe

We have strengthened our teams in Ukraine and Turkey and have increased the
number of events held by making a series of new launches. The reduction in space
sales reflects the sale of our stand alone Czech business last year and the
decision to withdraw from our Belgrade events.

In Kyiv space sales increased by over 30%, though the new launch activity meant
that this did not feed through proportionately to profits.

In Turkey our wholly owned business further extended its 'Caspian' brand, with
successful launches in the Transport, Banking and Finance and Ecology sectors.
Caspian Telecoms, launched last year exhibited further good growth. Overall
space sales in Istanbul were affected by a reduction in size of the low yielding
construction event, Ankomak, but profits were still higher than in 2002.

Western Europe and UK

One of our strongest performing brands for the year was MODA UK fashion, which
takes place in Spring and Autumn at the NEC in Birmingham. In particular
Womanswear outperformed all expectations and almost doubled the prior year
contribution. In September, ITE acquired a further 15% in ITE Moda Limited
bringing our interest up to 90%.

International Sales Offices & Rest of World

We have international sales offices based in London and Hamburg which focus on
selling international exhibitors into our emerging market events (sales are
shown in the regions where the events are held). We recently reviewed the
structure of our London office with a view to reducing overheads. Together with
other cost control measures we have successfully reduced our cost base in London
by circa £1m on an annualised basis, without impacting our sales capacity.

The Group has an increased focus in Africa, although this is not yet significant
in revenue terms. Our industry brands are proving to be very strong -
particularly in Oil and Gas where our brand has helped us win the tender for the
2005 World Petroleum Congress in Johannesburg. This in turn has provided a
platform for ITE to increase the spread of our oil and gas events throughout the
African market. If we consider a market to have significant potential, we look
to follow with the introduction of other selected events from our portfolio of
sector brands.


During the year ITE held 50% interests in exhibition organising businesses in
the Czech Republic, in Turkey and in Egypt. As noted earlier, subsequent to 30
September we have disposed of our Czech Republic interests.

ITF in Istanbul has had an encouraging year, organising 16 events including the
re-launch of important Auto events which had been postponed following the
economic crisis in 2001. This business is however still the lowest yielding
market in which we operate. Although the increase in space sales was of real
significance, the challenge for the future is to improve the yields and
profitability of the key events.


ITE has made very significant steps in consolidating and securing its key
business interests throughout the course of the past year. We have considerable
assets in our brands, international sales networks and local office
infrastructures and these will underpin future growth. The markets in which we
specialise continue to offer excellent prospects for us to develop and grow our
business further. We are also pursuing new market opportunities to leverage our
brand strengths. I look forward to and am excited by the prospects ahead.

Ian Tomkins
Chief Executive

Consolidated Profit & Loss Account
For the year ended 30 September 2003

                                                           2003         2002
                                                           £000         £000
Turnover                                                 58,934       52,431
Cost of sales                                           (32,213)     (31,012)
                                                         ------       ------

Gross profit                                             26,721       21,419
                                                         ------       ------
Net operating expenses before impairment and            (12,720)     (12,581)
goodwill amortisation
Impairment charge                                             -       (6,220)
Goodwill amortisation                                    (2,331)      (1,905)
                                                         ------       ------

Total net operating expenses                            (15,051)     (20,706)
                                                         ------       ------

Operating profit                                         11,670          713
                                                         ------       ------
Share of associates' operating profit/(loss)
before goodwill amortisation                                836       (1,211)
Goodwill amortisation                                      (132)        (160)
                                                         ------       ------

Share of associates' operating profit/(loss)                704       (1,371)
Provision or loss on disposal of group undertakings        (779)        (476)
                                                         ------       ------

Profit/(loss) on ordinary activities before              11,595       (1,134)
Interest receivable                                         760          824
Interest payable and similar charges                        (68)         (95)
                                                         ------       ------

Profit/(loss) on ordinary activities before              12,287         (405)
Tax on profit/(loss) on ordinary activities              (4,030)      (2,350)
                                                         ------       ------

Profit/(loss) on ordinary activities after                8,257       (2,755)
Minority interests                                            6          152
                                                         ------       ------

Profit/(loss) for the financial year                      8,263       (2,603)
Dividends                                                (4,359)      (6,548)
                                                         ------       ------

Retained profit/(loss) for the year                       3,904       (9,151)
                                                         ------       ------
Earnings/(loss) per share
Basic                                                       3.1p        (1.0p)
Diluted                                                     3.0p        (1.0p)
Headline diluted                                            4.2p         2.4p
                                                         ------       ------
                                                         ------       ------
Consolidated Balance Sheet
30 September 2003

                                                       2003               2002
                                                                 (as restated)
                                                       £000               £000
Fixed assets
Goodwill                                             30,016             30,826
Tangible assets                                       1,920              2,041
Associates                                            1,057                612
Other investments                                     2,412              2,492
                                                    -------            -------

                                                     35,405             35,971
Current assets
Debtors due within one year                          19,557             18,225
Debtors due after one year                            3,914              4,148
Cash at bank and in hand                             22,104             17,693
                                                    -------            -------

                                                     45,575             40,066

Creditors: amounts falling due within one year      (39,035)           (38,426)
                                                    -------            -------

Net current assets                                    6,540              1,640
                                                    -------            -------

Total assets less current liabilities                41,945             37,611
Provisions for liabilities and charges                 (984)            (1,241)
                                                    -------            -------

Net assets                                           40,961             36,370
                                                    -------            -------
                                                    -------            -------

Capital and reserves
Called-up share capital                               2,813              2,778
Share premium account                                27,996             27,495
Merger reserve                                        2,746              2,478
Option reserve                                          132                239
Profit and loss account                               7,277              3,377
                                                    -------            -------

Equity shareholders' funds                           40,964             36,367
                                                    -------            -------
Minority interests                                       (3)                 3
                                                    -------            -------

Total capital employed                               40,961             36,370
                                                    -------            -------
                                                    -------            -------

Consolidated Cash Flow Statement
For the year ended 30 September 2003

                                                               2003       2002
                                                               £000       £000
Net cash inflow from operating activities                    14,439     10,393
Returns on investments and servicing of finance                 692      1,080
Taxation                                                     (3,677)    (2,300)
Capital expenditure and financial investment                    145       (643)
Acquisitions and disposals                                   (3,595)    (5,624)
Equity dividends paid                                        (4,026)    (1,623)
                                                           --------   --------

Cash inflow before management of liquid resources and
financing                                                     3,978      1,283
Management of liquid resources                               (5,164)     2,300
Financing                                                       433        155
                                                           --------   --------

(Decrease)/increase in cash in the year                        (753)     3,738
                                                           --------   --------
                                                           --------   --------

Consolidated Statement of Total Recognised Gains and Losses
For the year ended 30 September 2003

                                                                 2003     2002
                                                                 £000     £000

Profit/(loss) for the financial year
Group                                                           7,762   (1,281)
Associates                                                        501   (1,322)
                                                            --------- --------

                                                                8,263   (2,603)
(Loss)/gain on foreign currency translation                       (46)      22
Adjustment to option reserve for lapsed options                    42      115
                                                            --------- --------

Total recognised gains and losses relating to the year          8,259   (2,466)
                                                            --------- --------                                          

1.     Basis of preparation

This report is for the year ended 30 September 2003 and was approved by the
Board on 8 December 2003.

The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2003 or 2002, but is derived
from those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies and those for 2003 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under s237(2) or
(3) Companies Act 1985.

The statutory accounts for the year ended 30 September 2003 have been prepared
following accounting policies consistent with those for the year ended 30
September 2002 except that the reserves for the year ended 30 September 2002
have been restated in order to follow the merger relief provisions of the
Companies Act 1985 where shares are issued at a premium for acquisition as set
out in note 5.

The accounts have been prepared on the historical cost basis and do not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985.

2.     Net operating expenses

Net operating expenses includes total administrative expenses of £15.3 million
(2002: £21.3 million) and rental income of £287,000 (2002: £150,000). The
balance for the prior year related to income in relation to profit rights in an
externally run exhibition of £442,000.

Administrative expenses include £0.4 million of redundancy costs and, in
connection with the Group's activities in the Czech Republic and Slovakia, £0.8
million of operating charges and £0.6 million of goodwill amortisation. In the
prior year, administrative expenses included non-recurring items of £1.4
million, being £0.6 million of redundancy and restructuring costs, £0.3 million
of provision against loans and £0.5 million of provision against rent and

3. Earnings per share

The calculations of earnings per share are based on the following results and
numbers of shares.
                                   Headline diluted            Basic and diluted
                                    2003           2002        2003         2002
                                    £000           £000        £000         £000

Profit/(loss) for
the financial year                8,263         (2,603)      8,263       (2,603)
Amortisation of
goodwill                          2,463          2,065           -            -
Exceptional amounts
written off goodwill
and investments                       -          6,220           -            -
Loss on disposal of
group undertakings                  779            476           -            -
                                 ------        -------      ------       ------

                                 11,505          6,158       8,263       (2,603)
                                 ------        -------      ------       ------

                                                 2003                       2002
                                    Number of shares            Number of shares
                                                  ('000)                  ('000)
Weighted average number
of shares:
For basic earnings
per share                                     270,527                    258,372
Exercise of share
options                                         3,643                      2,837
                                             ----------               ----------
                                             ----------               ----------
For diluted earnings
per share                                     274,170                    261,209
                                             ----------               ----------
                                             ----------               ----------

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. In the prior year, Headline diluted
earnings per share included profits and losses on disposal of group

4. Cash flow notes

Reconciliation of operating profit to operating cash flows

                                                               2003       2002
                                                               £000       £000

Operating profit                                             11,670        713
Depreciation charges                                            454        449
Amortisation                                                  2,331      1,905
Impairment                                                        -      6,220
Profit/(loss) on sale or write down of fixed assets             267        (69)
Increase in debtors                                          (1,234)    (2,776)
Increase in creditors                                           649      3,951
Increase in provisions                                          302          -
                                                           --------    -------

Net cash inflow from operating activities                    14,439     10,393
                                                           --------    -------
Analysis of net funds
                               30 September                       30 September
                                       2002       Cash flow               2003
                                       £000            £000               £000

Cash at bank and in hand             17,693            (753)            16,940
                                  ---------       ---------          ---------

Net funds                            17,693            (753)            16,940

Cash held on deposit                      -           5,164              5,164
                                  ---------       ---------          ---------

Cash shown on balance sheet          17,693           4,411             22,104
                                  ---------       ---------          ---------
                                  ---------       ---------          ---------

Reconciliation of net cash flow to movement in net funds
                                                           2003          2002
                                                           £000          £000
(Decrease)increase in cash in the year                     (753)        3,738
                                                      ---------     ---------

Movement in net funds in year                              (753)        3,738

Net funds at 1 October                                   17,693        13,955
                                                      ---------     ---------

Net funds at 30 September                                16,940        17,693
                                                      ---------     ---------

5. Reserves
                             Share    Merger    Option     Profit and    Total
                     premium account reserve   reserve   loss account     £000

                              £000      £000      £000           £000

1 October 2002 (as
reported)                   31,010         -       239          2,340   33,589
Transfer to merger
reserve                     (3,515)    2,478         -          1,037        -
                           -------    ------    ------        -------   ------

1 October 2002 (as
restated)                   27,495     2,478       239          3,377   33,589
Exercise of
options                        475         -       (65)             -      410
Retained profit
for the year                     -         -         -          3,904    3,904
Gain on foreign
translation                      -         -         -            (46)     (46)
Adjustment to
option reserve for
lapsed options                   -         -       (42)            42        -
consideration                    -       268         -              -      268
Shares issued for
remuneration                    26         -         -              -       26
                           -------    ------    ------        -------   ------

30 September 2003            27,996     2,746       132          7,277   38,151
                           -------    ------    ------        -------   ------
                           -------    ------    ------        -------   ------

The prior year adjustment relates to the correction required to follow the
merger relief provisions of the Companies Act 1985 to account for acquisitions
involving the issue of shares at a premium. A net total of £2,478,000 has been
transferred to the merger reserve which consists of £3,515,000 from the share
premium account to reflect the premium on shares issued for acquisitions made in
prior years and against this £1,037,000 in respect of goodwill amortisation and
impairments previously charged in the Group consolidated accounts.

6.     Post balance sheet event

On 7 November 2003 an agreement was signed between Incheba Praha, Incheba a.s.
and ITE whereby ITE disposed of its interest in Incheba Praha and Incheba a.s.
and any rights in the Coneco exhibition. The loan between ITE and Incheba Praha
was reduced by CZK 23,160,000 in November 2003 with the remaining balance being
repaid in equal tranches in December 2004 and 2005. A provision has been made
for the difference between the consideration due and the net book value of the
assets of £779,000.

                      This information is provided by RNS
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