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ITE Group PLC (ITE)

  Print      Mail a friend       Annual reports

Tuesday 06 December, 2005

ITE Group PLC

Final Results

ITE Group PLC
06 December 2005

6 December 2005

For Immediate Release

                                 ITE GROUP PLC

                        PRELIMINARY RESULTS ANNOUNCEMENT



                                 RECORD RESULTS



Highlights
                                              Year ended               Year ended               % change
                                          30 September 2005        30 September 2004


Turnover                                        £78.5m                   £60.8m                    29%

Profit before tax                               £23.0m                   £15.7m                    46%

Headline pre-tax profit*                        £26.0m                   £18.1m                    44%

Diluted earnings per share                       5.5p                     3.8p                     45%

Headline diluted earnings per share**            6.6p                     4.7p                     40%

Dividend per share                              2.75p                     2.2p                     25%


•   Strong growth in core markets

•   Headline pre-tax profits up 44% to £26m

•   Good contribution from biennial Moscow Oil and Gas exhibition and the
    one-off World Petroleum Congress

•   Headline diluted earnings per share up 40% to 6.6p

•   Total dividend increased by 25% to 2.75p per share

•   Recent acquisitions successfully integrated and benefiting from ITE
    ownership

•   37m of cash returned to shareholders through share buy back and
    dividends


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


'ITE's performance during the year confirms the strength of our business and the
growth potential in our markets. During the year the core business grew
strongly.  In addition we benefited from one-off and biennial exhibitions.  We
continue to demonstrate our ability to grow our leading events, launch new
exhibitions and integrate bolt-on acquisitions.

'The Group's focus on emerging and developing markets provides many
opportunities and ITE, with its strong and established presence in its key
markets, is well placed to continue to capitalise on them. The momentum we have
seen in 2005 has continued into the current financial year and the business is
performing in line with our expectations. We are confident of the prospects of
2006.'


*  Headline pre-tax profit is defined as profit before tax, amortisation and
impairment of goodwill (including associates) 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 and impairment of goodwill (including associates) and profits or
losses arising on disposal of group undertakings.



Enquiries:


Ian Tomkins                     ITE Group plc                      020 7596 5000
Charles Palmer/Tim Spratt       Financial Dynamics                 020 7831 3113





ITE Group plc



Preliminary statement for the year ended 30 September 2005




Chairman's Statement


Group Performance

All sectors of our business have had an excellent year yielding strong financial
results.  Turnover grew 29% to £78.5m (2004: £60.8m) and headline profit before
tax rose 44% to £26.0m (2004: £18.1m).  Headline diluted earnings per share
improved by 40% to 6.6p per share and diluted earnings per share improved to
5.5p (2004: 3.8p).  Profit before tax was £23.0m (2004: £15.7m).  A strong
performance from annually recurring business was augmented by contributions from
the biennial Moscow International Oil & Gas exhibition, and from the once-off
organisation of the World Petroleum Congress held in Johannesburg in September.
Excluding the effect of these two events turnover from the annually recurring
business increased by 14% and gross profits by 15%.


The Group returned £30m to shareholders via a tender to buy back its own shares
in July.  Due to the cash generative nature of the business, we finished the
year with a net £13.0m of cash and a strong balance sheet capable of supporting
investment and selective acquisition opportunities that are in line with our
strategic plans.



Strategic Process

During the year we have continued to implement our strategy of enhancing our
core business, principally through a combination of organic growth and 'bolt on'
acquisitions where the strategic fit is attractive.  Consistent with this
strategy we acquired Caspian Events Limited (Caspian Oil & Gas in Azerbaijan) at
the beginning of the financial year, BTO AgriHort (Agriculture in Kyiv) in
August and Footwear UK (Fashion in Birmingham and London) in September and these
have all been successfully integrated into our existing infrastructure.


We tendered for, purchased and cancelled £30m of our own share capital in July
demonstrating our desire to improve the efficiency of the Group's balance sheet
in light of the Group's strong positive operational cash flow.


A further significant event was the recent conclusion of a long term
co-operation agreement with Crocus (the new Moscow exhibition venue).  This
agreement is supplementary to ITE's main long-term agreement for the Expocentr
venue in central Moscow.  Given the potential for growth in the Moscow
exhibition market fuelled by the new space at Crocus, it is important for ITE to
maintain substantive contractual relationships with both of the main venues in
Moscow.


Board and Management

Following the reduction in the shareholding of Veronis Suhler Stevenson,
Christopher Russell stepped down from the Board.  In addition, Ross Stobie,
Director General of the Moscow office, resigned from the Board following the
conclusion of three years of service in Moscow. The Board extends its thanks to
both Ross and Christopher who have both played important roles in our success
over recent years.


The success of our business largely depends on the relationships that our staff
build and maintain with our customers.  I should like, therefore, to express the
Board's appreciation for the continued efforts which all our staff have made in
achieving such a strong set of results.


Dividend

The Board increased the interim dividend to 0.9p per share (2004: 0.55p) and
recommends a final dividend of 1.85p per share making a total dividend for the
year of 2.75p per share, a 25% increase on last year's total dividend of 2.2p
per share.  Taken together with the share buy back in the summer the Company
will have returned £37m of cash to shareholders this year.


Outlook

The momentum seen in 2005 has continued into the current financial year and
there are good indications that the underlying growth is set to continue.
Overall the Board is confident that ITE is well positioned to benefit from both
the changing exhibitions environment in Moscow, and from the ongoing economic
growth apparent across the regions in which we operate.




Iain Paterson
Chairman
6 December 2005




Chief Executive's Review


Financial performance

Turnover for the year ended 30 September 2005 was £78.5m (2004: £60.8m). Overall
gross profit for 2005 was £36.0m, (2004: £27.2m) earned at a gross margin of
45.8% (2004: 44.8%).


This year's result was buoyed by the biennial effect of the Moscow International
Oil & Gas exhibition ('MIOGE'), and the once-off contract to organise the World
Petroleum Congress ('WPC') in Johannesburg, South Africa.  Excluding the effect
of these two events, the result from annually recurring business was a turnover
of £69.4m, representing a 14% improvement on 2004's comparable figure, and a
gross profit of £31.3m, a 15% improvement on 2004's comparable figure.


Operating profit of £20.6m for the financial year (2004: £13.8m) was after
charging operating expenses of £15.4m (2004: £13.4m).  The increase of £2.0m in
operating expenses reflects higher levels of staff employed in line with rising
activity levels throughout the Group and higher inflation rates in the regions
in which ITE operates, together with an increasing cost of expensing the ITE
Performance Share Plan (£0.6m in 2005; £0.3m in 2004).


The associate company contribution of £0.5m (2004: £0.5m) is from the Group's
50% owned associate business in Turkey, which reported good sales.  However
lower yields and higher operating costs culminated in a similar financial
contribution to last year.


Trading highlights

In 2005 ITE organised 152 exhibitions in 16 countries (2004: 137 events in 15
countries). There were 27 new launches in the year. Total square metres sold in
2005 were 341,000 (2004: 276,000) at an average yield of £227 per square metre
(2004: £220 per metre).


An analysis of the key changes in the Group's overall revenue, gross profit and
volume sales is set out below:

                                       Square metres              Revenue         Gross profit
                                             (000's)            £'million            £'million
2004 Sales & gross profits                       276                 60.8                 27.2
Biennial & WPC                                    21                  9.1                  4.7
                                                 297                 69.9                 31.9
Non recurring and timing                        (11)                (3.0)                (0.3)
differences
New launches                                      11                  2.4                  0.1
Acquisitions                                      11                  2.1                  1.0
Growth on recurring events                        33                  5.8                  2.9
Publishing                                                            1.2                  0.4
2005 Sales & gross profits                       341                 78.5                 36.0


The increase in net square metre sold of 65,000 metres was spread throughout
Russia and the CIS countries in which ITE operates. The exhibition business in
Moscow, helped by the biennial recurrence of the Moscow International Oil and
Gas event and the growth of its Mosbuild construction event contributed a 12%
increase in its square metre sales. All ITE's offices in the CIS countries
enjoyed strong levels of growth with Ukraine's volume of square metre sales
growing by 18%, Kazakhstan's and Azerbaijan's sales volumes increasing by 12%,
Uzbekistan's by 35%, and St Petersburg's by 10%.


The top ten events ranked by gross profit sold a total 181,700m(2) with the
annually recurring events in the top ten showing an overall expansion of 13% in
volume sales over their 2004 equivalent events. The benefit of having more space
to sell, notably at the Mosbuild construction event in Moscow and the Kazakhstan
Oil & Gas Exhibition in Almaty underpinned the growth in ITE's biggest events.


Gross profit of £36.0 million (2004: £27.2 million) analysed by industry sector
is set out below:

                                                     2005                         2004

Construction                                          32%                          40%
Oil & Gas                                             22%                           9%
Travel                                                10%                          13%
Food                                                  10%                          12%
Motor / Transport                                      8%                           8%
Fashion                                                5%                           5%
IT                                                     4%                           5%
Other                                                  9%                           8%


Total gross profit has increased by 32% with much of the activity being driven
by the oil and gas and construction sectors. This year the oil and gas sector
includes significant contributions from the Kazakhstan International Oil and Gas
event, the biennial Moscow International Oil & Gas event, the World Petroleum
Congress and the newly acquired Caspian Oil & Gas event.  The continuing
strength of construction events throughout Russia and the CIS reflects the
increasing investment being made year on year into private and public
infrastructure projects.


Review of Operations

Gross profit analysed by the main geographical regions in which ITE operates is
set out below, followed by a review of the most significant events for 2005 in
each of the regions.

                                                         2005                      2004

Russia                                                    70%                       76%
Central Asia & Caucasus                                   14%                       13%
Southern & Eastern Europe                                  4%                        3%
Western Europe                                             6%                        8%
Rest of World                                              6%                      0.2%




Russia

Offices: Moscow, St Petersburg

                                                      2005                       2004

Staff                                                  188                        161
Exhibitions                                             40                         44
Square metres                                      194,000                    173,000


ITE Group's Moscow office has seen changes in the exhibition market environment
over the year and has implemented a series of initiatives.


Expocentr, with whom ITE has a long and established trading relationship,
continues to host the Group's most important events.  A shortage of quality
venue space in Moscow has however restricted the growth of some of ITE's
exhibitions until recent times.  Crocus, a new purpose built exhibition facility
in Moscow opened with Phase I of its project in late 2004.   In April 2005 ITE
held 'Mosbuild+' at Crocus, being a re-location of the Windows & Doors event
together with 'Interiors'  and was a resounding success.  The combined meterage
of Mosbuild and Mosbuild+ was 54,400m(2), an increase of over 20% on the 2004
equivalent combined meterages.  ITE has also initiated further re-locations to
Crocus for 2006, including Expoelectronica (April 2006), Mining World Russia
(April 2006), Moscow International Motor Show (Sept 2006) and Ingredients Russia
(Nov 2006).  On 28 September 2005, ITE formalised the basis of a long-term
co-operation agreement with Crocus until 2015 with respect to certain key
exhibitions, and in October ITE made an advance payment of $10m against specific
venue tenancy contracts for the future.

Our major Moscow exhibitions all enjoyed attractive increases in size with
maintained or improved yields.  Ingredients Russia in November 2004 continued
its expansion, improving space sales by 16% to 5,500m(2).  Moscow International
Travel exhibition in March grew 13% to 19,200m(2) (2004 : 17,000m(2)); and the
biennial Moscow International Oil & Gas exhibition in June sold 15,600m(2) an
increase of 9% over its 2003 equivalent. The Motor event held in August was the
Moscow International Motor Show, primarily focussed on the spare parts,
accessories and repairs and maintenance sectors.  Following a series of changes
that have taken place over the course of the past year with respect to the Motor
sector in Russia, ITE will now pursue its Moscow International Motor Show at
Crocus commencing in September 2006.  The Moscow Autumn event season finished
with a good result from WorldFood Moscow selling 20,300m(2), but it remains
restricted in its growth given current space availability issues at Expocentr.

In May, Alexander Shtalenkov joined ITE as Director General, Moscow with
responsibility for further developing the Group's leading Moscow business.
Alexander has an established background of managing international businesses in
Russia.

The dynamics of supply and demand have changed substantially in Moscow.  With
the second phase of the new Crocus exhibition facility opening in September
2005, an additional 90,000 gross m(2) has been supplied to the Moscow exhibition
industry over the last two years, effectively doubling the availability of
international quality exhibition space in the city.  Whilst this assists growth
by releasing various constraints on some of ITE's key events, it also invites
increasing competition.  ITE with its recognised international brands,
established venue relationships, and unparalleled office infrastructure is in a
strong position from which to benefit from the expected growth in the Moscow
exhibitions market.

Exhibitions in St Petersburg represented 22,800m(2) of ITE's sales in Russia and
enjoyed 9% growth in volume.  The largest event, Baltic Building Week realised
sales of 10,200m(2) a small increase on the 2004 result.  Lenexpo, the St
Petersburg venue, has now finished construction of its new pavilion. After
de-commissioning some older halls the venue now offers an additional 4,000m(2)
of gross space into which ITE plans to grow its events.


Central Asia & Caucasus

Offices: Kazakhstan (Almaty, Astana, Atyrau), Azerbaijan (Baku), Uzbekistan
(Tashkent) and Georgia (Tbilisi)

                                                     2005                      2004

Staff                                                 134                       116
Exhibitions                                            63                        56
Square metres                                      59,200                    47,000



The Central Asia and Caucasus regions have continued their strong growth this
year - driven by new launches, new regional opportunities and strong exhibitor
demand.  This year also included a first time contribution from the Caspian Oil
and Gas exhibition which was acquired in October 2004.  The combination of
organic growth and the aforementioned acquisition delivered an increase from the
region of more than 25% in space sold and gross profit over the comparative
performance in 2004.


As announced in the interim statement the Kazakhstan Oil and Gas Exhibition,
which runs simultaneously with the conference, grew by 20% to over 7,400m(2).
Kazbuild, organised in September also achieved growth of 20% in selling over
8,200m(2).  Both of these exhibitions are now currently space constrained at the
Atakent venue facility in Almaty.  However the construction team are launching a
new Kazbuild Spring in 2006 to satisfy demand.

The Azerbaijan office successfully integrated the Caspian Oil and Gas exhibition
acquired in October 2004.  ITE substantially improved the profitability of the
event in its first edition using its extensive sales network and local office
resources.  In addition there were several new launches in Baku covering
consumer electronics, cleaning and a once-off customs event.  However
difficulties with availability of the venue which also operates as a sports
facility necessarily caused the postponement of BakuBuild from September until
October 2005.

ITE Group's exhibition business in Tashkent, Uzbekistan contributed very strong
growth more than doubling its sales and profits over the last year.  A highlight
among ITE's emerging markets, the office initiated eight new launches in the
year.  TextileExpo achieved a very significant performance in its second edition
with space sales more than doubling.

Expansion into new Central Asian regions included the launching of a number of
small initial events in Mongolia, Tajikistan and Kyrgyzstan in 2005.  ITE
Central Asia has now established small offices in Beijing and Urumqi in Western
China.


Eastern & Southern Europe
Offices: Turkey (Istanbul), Ukraine (Kyiv)

                                                  2005                      2004

Staff                                               98                       102
Exhibitions                                         35                        28
Square metres                                   49,000                    36,000



The Kyiv office produced a 50% increase in revenue and operating profit for the
year ending 30 September 2005.  This included excellent first time contributions
from the two acquired exhibitions Public Health and Informatica, which together
added 6,500m(2) of sales.  WorldFood Ukraine organised in November 2004 was
affected by the political unrest at the time and was 15% smaller than in the
previous November. However the ordinary course of business was soon
re-established in early 2005 and Kievbuild in February 2005 recorded strong
growth in achieving sales of over 5,250m(2).

ITE made two further acquisitions in the year in Kyiv, Photofair Kyiv, a small
specialist event focused on digital photography and production, and, more
significantly the acquisition of BTO's Kyiv AgriHort.  The latter event is
conducted in February and is the leading agricultural machinery and products
event in the Ukraine.  In February 2006 it is scheduled to expand into the newly
completed phase II of the IEC exhibition halls, where ITE has been a contributor
to the financing arrangements.

ITE's 100% owned Turkish office has continued developing its important and
growing role in selling outbound Turkish exhibitors into the Group's Russian and
Central Asian exhibitions.  It also organises a series of local events and '
Caspian regional conferences'.  Yields are still disappointingly low in Turkey
and the 19,200m(2) sold in 2005 only yield marginal profits for ITE.


Associate Company - ITF


ITF, a 50% owned associate business in Istanbul, had a successful trading year
with volume sales and revenues both showing strong growth.  The 2005 event
calendar included Autoshow (cars) and Otomotive (spare parts / accessories) and
enjoyed spectacular growth with the Furniture Show, IMOB.  The growth however
was again at lower yields. The higher yielding clothing fabric and textile event
was reduced in size as a consequence of re-positioning it's target exhibition
market.  The Turkish economy has now enjoyed a period of greater stability and
the continuance of such a stable economic environment will be welcome.


Western Europe and UK

Offices: London, Northern England, Hamburg


                                                  2005                      2004

Staff                                              158                       155
Exhibitions                                          4                         4
Square metres                                   25,000                    21,000


MODA UK is ITE's seventh highest contributing exhibition to Group gross profits
this year.  The Womenswear, Menswear and Accessories exhibitions added a catwalk
to the shows and invested in a series of new initiatives, which helped support
the growth in sales to from 21,000m(2) to 24,000m(2) this year.


On 28 September ITE announced that it had acquired a series of complementary
Footwear exhibitions in the UK, two of which have historically been co-located
and share visitor audiences with our MODA Fashion events at the NEC in
Birmingham.  ITE is currently re-branding the events and will expand the
marketing of the events using ITE's UK infrastructure.


RAS Publishing, ITE's business to business fashion publications business, has
enjoyed a successful first full year under ITE's stewardship.  Circulations of
the Womenswear and Menswear Buyer publications were stable, whilst advertising
revenue improved by circa 13%.  RAS Publishing made a minor acquisition of an
accessories magazine during the year, which has been integrated into the
business, re-branded and re-launched as Fashion Extras.


Of the total staff number employed in the UK and Western Europe, 27 are based in
Germany and are focussed on contributing outbound sales into our Russian and CIS
exhibitions; 99 staff are currently based in London, of which more than half are
sales orientated with the balance consisting of corporate, finance and
administrative roles.


Rest of World

Offices: Johannesburg


The highlight of the year's 'rest of the world' activity was the organisation of
the World Petroleum Congress ('WPC) in Johannesburg, South Africa.  The event
attracted over 3,200 delegates (80% International), had over 500 speakers and
was co-located with a new launch exhibition of 400 exhibitors utilising 9,000
square meters of net space.  The event was a resounding success and the level of
sponsorship raised for the events, as well as the number of paying foreign
delegates attending the event, was the highest ever achieved in the WPC's 72
year history.  Furthermore, the exhibition held alongside the congress was the
largest oil and gas exhibition ever organised in Africa.  ITE developed an
unprecedented network of media partners to ensure maximum exposure globally and
coupled with the sales, marketing and logistical achievements, the event
evidenced ITE's maturity as a leading world class professional event organiser.
The culmination of three years work from a dedicated ITE team yielded overall
revenues of £5.5m and a pre-tax profit in the year of £2.0m.


Outlook

ITE's strategy is to focus on organic growth opportunities in our core markets,
whilst making complementary 'bolt-on' acquisitions.

The recent increase in supply of available Moscow exhibition venue space creates
opportunities. ITE will continue to focus on its existing business, increasing
its competitiveness and building on its expertise and infrastructure advantages,
to ensure the Group will be the major beneficiary of the increase in capacity of
the Moscow exhibitions market. Consistent with this ITE has concluded a new 10
year co-operation agreement with the Crocus venue in Moscow, that will relieve
space constraints on Mosbuild, Expoelectronica and several other events.;
Increased space could create opportunities for competitors.  Nonetheless we
believe that ITE is in a very strong position to benefit from the available
opportunities and meet the challenges as they arise.

ITE Group's Central Asia business continues to enjoy significant growth
opportunities and resides in a region blessed with substantial natural
resources.  ITE remains the dominant force in conducting international trade
exhibitions in the region.  The Ukraine business is also contributing excellent
growth and will benefit this year from having more available venue space.

ITE Group's emerging and developing markets focus provides many opportunities
and challenges.  ITE Group's stable senior management team, well established
network of local offices, together with its strong reputation and brand identity
are key assets which will provide the platform for continued growth.  As of 2
December 2005 advance sales for the 2006 event calendar were £43m (2004: £42m),
an increase of 10% on a comparable basis with the forward sales position at this
time last year. After another successful year and with the Group performing
inline with expectations, the Board remains positive and confident with respect
to the development and growth prospects ahead for the business.



Ian Tomkins
Chief Executive
6 December 2005


Group Financial review


Earnings per share

The diluted earnings per share increased to 5.5p from 3.8p in the prior year.
The Group achieved headline diluted earnings per share of 6.6p per share
compared with 4.7p for the year to 30 September 2004. Headline diluted earnings
per share is based upon profit for the financial year before amortisation and
impairment of goodwill, (including associates) and profits or losses on disposal
of Group undertakings.


Acquisitions & disposals

As reported in last year's financial statements ITE acquired 100% of the issued
share capital of Caspian Events Limited on 6 October 2004 for £2.2m in cash.


On 2 August 2005 ITE completed the acquisition of 100% of BTO Beurs-en
Tentoonstelling - Organisatie B.V. ('BTO') for consideration of €2.0m of which
€0.6m is payable in three instalments on the 30 April 2006, 2007 and 2008.  BTO
owns the AgriHort exhibition held in Kyiv every February, and on which ITE has
been the local partner for the last five years.


On 28 September 2005 ITE acquired 100% of DEW Events Limited which owns four
Footwear exhibitions for an initial consideration of £3.4m in cash.  £2.6m of
the consideration was paid on completion with a further £0.8m paid in November
2005.  There are put and call options existing over management's retained 25% in
ITE Footwear Limited (which owns the two London exhibitions) based on a multiple
of profits and not normally exercisable before 1 November 2008.


Deferred receipts of $0.24m from the sale of ITE's interests in ACG have been
received in the year, and a further $0.15m has been received since 30 September
2005.  The balance remaining still due is $0.05m.



Post balance sheet event

Events since 30 September 2005

In October 2005 ITE Group made advance payments of $10m to Crocus, a Moscow
exhibition venue.  The payments are made against specific exhibition venue
licence agreements.


Tax charge

The tax charge of £7.4m represents 28.5% of headline pre-tax profits. The Group
anticipates that for the next year the tax rate will remain below the UK
Corporation tax rate of 30% due to the lower tax rate experienced in some of our
major overseas markets.  However anticipated changes to Dutch tax legislation
has restricted the availability of future tax losses to the Group in Holland.


Capital

The Company cancelled its share premium account of £29,944,011 on 8 July 2005.
It subsequently used the distributable reserves so created to buy back and
cancel 29,126,208 of its own shares for a cost of £30.2m.  The net effect of
these transactions was to reduce the issued share capital by 10% and to reduce
the Group's net assets by £ 30.2m.  The Company has also issued 3,847,401
ordinary shares of 1p in the year. This represents 1.3% of the issued share
capital at 1 October 2004. Of the total new issues 3,802,537 were pursuant to
the exercise of options and yielded aggregate consideration of £0.96m. The
remaining shares were issued as part of Directors' remuneration.


The Employees Share Option Trust ('ESOT') held 11,127,000 (4.3%) of the
Company's issued share capital at the year end (2004: 10,427,000; 3.6%).  The
ESOT has acquired further shares in the market over the course of the year.


Cash flow

Net cash at 30 September 2005 was £13.0m (2004: £33.5m).  Cash inflow from
operating activities in the year to 30 September 2005 was £28.6m (2004: £21.8m).
Cash outflow on acquisitions was £6.1m.  A net £30.0m was applied in buying
back the Company's own shares (including ESOT purchases) and after taking
account of consideration from new issues. A further £8.4 was applied in taxation
payments and £7.1m was paid to shareholders as dividends.


Of the £13.0m of cash £6.5m was held in a trust account, which will be released
as certain creditors are paid in full.  At 30 September 2005 £2.2m of the cash
in trust was expected to be released within one year and £4.3m was expected to
be released after 30 September 2006.


Interest

Net interest earned in the year was £1.65m (2004: £1.1m). The Group held average
cash balances of £32.9m through the year (2004: £27.4m).


Investment and capital expenditure

The Group's capital expenditure on plant and equipment for the year was £0.4m
(2004: £0.7 million) and included exhibition equipment, computer equipment and
associated software.


The Group funds the development of venues and facilities where improved
facilities will enhance the prospects and profitability of our organising
business. The funding can take the form of a prepayment of future venue fees ('
advance payments'), or a loan which can be repaid by cash or by offset against
future venue fees ('venue loan'). Generally the funding brings rights over
future venue use and advantageous pricing arrangements. Venue loans and advance
payments are included under debtors in the balance sheet and are treated as
financial investments in the Cash flow statement.


At 30 September 2005 the Group's Sterling value of the outstanding balances of
advance payments and venue loans was £3.9m (2004: £4.6m) as follows:

                              30 September           Repayments          New Advances          30 September
                                      2004                                                             2005
                                        £m                   £m                    £m                    £m

Kyiv*                                  1.6                (0.3)                     -                   1.3

Almaty +                               0.8                (0.5)                   0.5                   0.8
St. Petersburg*                        2.0                (0.6)                     -                   1.4
Uzbekistan*                              -                (0.1)                   0.3                   0.2

Bulgaria+                              0.2                (0.1)                     -                   0.1
                                       4.6                (1.6)                   0.8                   3.8

* advance payments
+ venue loans


These balances will be recovered from future venue use within three years except
in Bulgaria and St Petersburg. In St Petersburg part of the advance repayments
relate to future events taking place between 2007 and 2011. ITE is not presently
active in Bulgaria and the loan will be repaid in instalments.

This table does not include an advance payment to the Crocus venue in Moscow of
US$10m (£5.7m) made in October 2005.


Financial risk

The main financial risk facing the Group is foreign currency risk.  The Board
has reviewed and agreed policies to manage financial risk as follows:


Foreign currency risk

The Group is exposed to movements in foreign exchange rates against Sterling for
both trading transactions and for the translation of net assets and the profits
and loss accounts of overseas operations. The principal exposure is to the Euro
and Dollar exchange rates which form the basis of invoicing for our
international customers. During the year the Group experienced net foreign
exchange losses of £0.7m (2004:£0.4m). The exchange rate for the Euro at 30
September 2005 was €1.46:£1 (30 September 2004: €1.46: £1); the exchange rate
for the US dollar started the year at $1.80:£1, and finished the year $1.76:£1.

The bulk of the Group's business is in emerging markets and to minimise the
currency risk, the Group prices predominantly in Euros and US dollars.  A
proportion of total invoicing amount is settled in local currency equivalent,
translated at prevailing rates of at the date of settling invoices.  In 2005 52%
of the Group's sales were priced in Euros and 41% in US dollars.  Overall 70% of
the Group's cash receipts in financial year ending 30 September 2005 were in
hard currency and 30% was in various local currencies.   The Group has a large
proportion of its revenues and costs denominated in non-Sterling currencies.
Sterling costs exceed Sterling revenues due to the level of UK based costs - in
particular London sales and head office costs.  At 30 September 2005 the
weighted average exchange rate for forward sales against Sterling used for
converting US dollar sales was $1.82 (2005 financial year: $1.84) and for Euro
sales was €1.47 (2005 financial year: €1.47).

The Group uses derivative instruments and currency borrowings to protect itself
against the effect of currency fluctuations on its balance sheet. The Group's
policy on derivative instruments is that:


•     it will only hedge up to 80% of the value of anticipated cash
      flows and;

•     it will not enter into derivative transactions more than 18
      months ahead.


Over the course of the year the Group has entered into currency borrowing
arrangements to minimise it's exposure to foreign exchange risk. The currency
borrowings can be offset against the matching Sterling deposits. The net cash
balances of £13.0m at 30 September 2005 are shown in the balance sheet.


Interest rate risk

The Group finances its operations through cash holdings and debt facilities.
The objective of the Group is to maximise investment income and minimise
interest costs bearing in mind its liquidity requirements.

For short term debt, such as overdraft facilities or debt with a term of less
than six months, fixed or floating rates of interest are used.  For debt with a
term of greater than six months, it is policy that at least 75% must have fixed
rates of interest so as to minimise the Group exposure to interest rate
movements.

It is Group policy that surplus cash is not invested in instruments that would
put the capital value at risk.  All invested funds have a determinable rate of
interest.


Liquidity risk

The Group policy is to ensure continuity of funding for operational needs
through cash deposits and debt facilities as appropriate.  The key requirement
for the business is to maintain flexibility to allow the Group to take advantage
of opportunities that could arise over the short term. The needs of the business
are determined on a rolling cash flow forecast basis, covering weekly, monthly
and twelve monthly requirements.  Short term flexibility is maintained by
holding cash in current accounts and high liquidity money market funds.  The
Group has overdraft facilities in place both to permit currency borrowing as
part of its foreign exchange management and to allow flexibility in where it
holds its cash balances.


Going concern

After considering the current financial projections for the Group, the Directors
have a reasonable expectation that the Company has adequate resources to
continue its operations for the foreseeable future. For this reason they
continue to adopt the going concern basis in preparing the accounts.


Adoption of International Financial Reporting Standards ('IFRS')

The Company's adoption of IFRS for the year ending 30 September 2006 will first
impact on the interim statement for the six months to 31 March 2006. The main
areas that are expected to have an effect on the Group's consolidated pre-tax
profits are the treatment of share based payments and the amortisation of
goodwill and intangible assets. The Company will issue a restatement of its
results for the year ended 30 September 2005 and its consolidated balance sheet
at 30 September 2005 presented in accordance with IFRS, prior to making the
interim announcement.


Russell Taylor
Finance Director
6 December 2005


Consolidated Profit and Loss Account
For the year ended 30 September 2005

                                                                           2005             2004
                                                                           £000             £000
Turnover                                                                 78,547           60,750
Cost of sales                                                           (42,552)         (33,542)
                                                                     __________       __________
Gross profit                                                             35,995           27,208
     Net operating expenses before goodwill amortisation                (12,232)         (10,883)
     Goodwill amortisation                                               (3,142)          (2,528)

Total net operating expenses                                            (15,374)         (13,411)
                                                                     __________       __________
Operating profit                                                         20,621           13,797

     Share of associates' operating profit before goodwill                  612              676
amortisation
     Goodwill amortisation                                                 (153)            (221)

Share of associates' operating profit                                       459              455
Profit on disposal of group undertakings                                    221              323
                                                                     __________       __________
Profit on ordinary activities before interest                            21,301           14,575
Interest receivable                                                       2,085            1,148
Interest payable and similar charges                                       (427)            (16)
                                                                     __________       __________
Profit on ordinary activities before taxation                            22,959           15,707
Tax on profit on ordinary activities                                     (7,429)          (4,955)
                                                                     __________       __________
Profit on ordinary activities after taxation                             15,530           10,752
Minority interests                                                           33              (31)
                                                                     __________       __________
Profit for the financial year                                            15,563           10,721
Dividends paid and proposed                                              (7,146)          (5,984)
                                                                     __________       __________
Retained profit for the year                                              8,417            4,737
                                                                     __________       __________
Earnings per share
Basic                                                                       5.7p             3.9p
Diluted                                                                     5.5p             3.8p
Headline diluted                                                            6.6p             4.7p
                                                                       _________          _______




Consolidated Balance Sheet
30 September 2005
                                                                                              2005        2004
                                                                                              £000        £000
                      Fixed assets
                      Goodwill                                                              33,698      29,348
                      Tangible assets                                                        1,741       1,862
                      Associates                                                             1,257       1,377
                      Other investments                                                        109          74
                                                                                       ___________ ___________
                                                                                            36,805      32,661
                      Current assets
                      Debtors due within one year                                           22,810      23,426
                      Debtors due after one year                                             2,216       4,060
                      Cash at bank and in hand (Note 6)                                     13,019      33,546
                                                                                       ___________ ___________
                                                                                            38,045      61,032

                      Creditors: amounts falling due within one year                       (48,335)    (47,773)
                                                                                       ___________ ___________
                      Net current (liabilities)/assets                                     (10,290)     13,259
                                                                                       ___________ ___________
                      Total assets less current liabilities                                 26,515      45,920
                      Provisions for liabilities and charges                                (2,316)     (1,498)
                                                                                       ___________ ___________
                      Net assets                                                            24,199      44,422
                                                                                       ___________ ___________

                      Capital and reserves
                      Called up share capital                                                2,599       2,852
                      Share premium account                                                     38      29,036
                      Capital redemption reserve                                               291           -
                      Merger reserve                                                         2,746       2,746
                      Option reserve                                                             -          23
                      ESOT reserve                                                          (3,562)     (2,792)
                      Profit and loss account                                               21,893      12,329
                                                                                       ___________ ___________
                      Equity shareholders' funds                                            24,005      44,194
                                                                                       ___________ ___________
                      Minority interests                                                       194         228
                                                                                       ___________ ___________
                      Total capital employed                                                24,199      44,422
                                                                                       ___________ ___________




Consolidated Cash Flow Statement
For the year ended 30 September 2005

                                                                                          2005           2004
                                                                                          £000           £000
Net cash inflow from operating activities                                               28,598         21,754
Dividends received from associates                                                         437            172
Returns on investments and servicing of finance                                          1,658          1,132
Taxation                                                                                (8,378)        (3,363)
Capital expenditure and financial investment                                                13         (2,858)
Acquisitions and disposals                                                              (5,785)        (1,345)
Equity dividends paid                                                                   (7,088)        (4,545)
                                                                                    __________     __________
Cash inflow before management of liquid resources and financing                          9,455          10,947
Management of liquid resources                                                          17,974         (19,336)
Financing                                                                              (29,982)            495
                                                                                    __________      __________
Decrease in cash in the year                                                            (2,553)         (7,894)
                                                                                    __________      __________





Consolidated Statement of Total Recognised Gains and Losses

For the year ended 30 September 2005


                                                                                            2005        2004
                                                                                            £000        £000

Profit for the financial year
     Group                                                                                15,325      10,534
     Associates                                                                              238         187
                                                                                     ___________ ___________
                                                                                          15,563      10,721
Gain on foreign currency translation                                                         750          96
                                                                                     ___________ ___________
Total recognised gains and losses relating to the year                                    16,313      10,817
                                                                                     ___________  __________




Notes


1       Basis of preparation


This Preliminary Announcement is for the year ended 30 September 2005 and was
approved by the Board on 6 December 2005.

The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 30 September 2005 or 2004, but is derived
from those accounts. Statutory accounts for 2004 have been delivered to the
Registrar of Companies and those for 2005 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 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 £15.7 million
(2004: £13.7 million) and other operating income of £316,000 (2004: £303,000).


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
                                                                  2005       2004        2005        2004
                                                                  £000       £000        £000        £000

Profit for the financial year                                   15,563     10,721      15,563      10,721
Amortisation of goodwill (including associates)                  3,295      2,749           -           -
Profit on disposal of group undertakings                         (221)      (323)           -           -
                                                              ________   ________    ________    ________
                                                                18,637     13,147      15,563      10,721
                                                              ________   ________    ________    ________


                                                                               2005                     2004
                                                            Number of shares ('000)  Number of shares ('000)
Weighted average number of shares:
For basic earnings per share                                                273,134                  274,435
Exercise of share options                                                     9,197                    7,203
                                                                         ___________             ___________
For diluted earnings per share                                              282,331                  281,638
                                                                         ___________             ___________



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 of goodwill and profits or losses arising on disposal
of group undertakings.


4       Reserves
                                        Share     Merger    Capital       Option      ESOT   Profit and      Total
                                      premium    reserve  Redemption     reserve   reserve loss account
                                      account               reserve
Group                                    £000       £000                    £000      £000         £000       £000
                                     
1 October 2004                         29,036      2,746             -        23   (2,792)       12,329     41,342
Exercise of options                       912          -             -      (23)        99            -        988
Retained profit for the year                -          -             -         -         -        8,417      8,417
Gain on foreign currency                    -          -             -         -         -          750        750
translation
Gain on exercise of ESOT options            -          -             -         -         -           48         48
Options issued in the year at a             -          -             -         -         -          592        592
discount to market value
Shares issued for remuneration             35          -             -         -         -            -         35
Capital reduction                    (29,945)          -             -         -         -       29,945          -
Purchase and cancellation of                -          -           291         -         -     (30,188)   (29,897)
shares
Purchase of shares by ESOT                  -          -             -         -     (869)            -      (869)
                                  _________   ________   ________      ______    ______    _________    ________
30 September 2005                          38      2,746           291         -   (3,562)       21,893     21,406
                                  _________   ________   ________      ______    ______    __________   ________






5                Reconciliation of operating profit to operating cash flows


                                                                          2005                        2004
                                                                          £000                        £000

Operating profit                                                        20,621                      13,797
Depreciation charges                                                       448                         471
Amortisation                                                             3,142                       2,528
Loss on sale or write down of fixed assets                                  79                         103
Decrease/(increase) in debtors                                           1,969                      (2,638)
Increase in creditors                                                    1,365                       6,546
Increase in provisions                                                     974                         947
                                                                    __________                   __________
Net cash inflow from operating activities                               28,598                      21,754
                                                                    __________                   __________



6         Analysis of net funds

                                                        30 September                            30 September
                                                                2004           Cash flow                2005
                                                                £000                £000                £000

Cash at bank and in hand                                       9,046             (2,553)               6,493
                                                          __________          __________          __________
Net funds                                                      9,046             (2,553)              (6,493)

Cash held on deposit                                          24,500            (24,500)                   -
Cash held on Trust                                                 -              6,526                6,526
                                                          __________          __________          __________
Cash shown on balance sheet                                   33,546            (20,527)              13,019
                                                          __________          __________          __________



As a result of the capital reduction, £6.5m is held in a trust account, which
will be released as certain creditors are paid in full.  At 30 September 2005
£2.2m of the cash in trust was expected to be released within one year and £4.3m
was expected to be released after 30 September 2006.

Subsequent to year end, ITE Group made advance payments of $10m to Crocus, a
Moscow exhibition venue.  The payments are made against specific exhibition
venue licence agreements.



7        Reconciliation of net cash flow to movement in net funds
                                                                                    2005                2004
                                                                                    £000                £000
Decrease in cash in the year                                                      (2,553)             (7,894)
                                                                              __________          __________
Movement in net funds in year                                                     (2,553)             (7,894)


Net funds at 1 October                                                             9,046              16,940
                                                                              __________          __________
Net funds at 30 September                                                          6,493               9,046
                                                                              __________          __________



8              Dividend payment dates



Final dividend 2005



Ex date                                               25 January 2006



Record date                                           27 January 2006



Annual General Meeting                                23 February 2006



Payment date                                          3 March 2006







Interim dividend 2006



Record date                                           June 2006



Payment date                                          July 2006





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