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ITE Group PLC (ITE)

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Tuesday 04 December, 2007

ITE Group PLC

Preliminary Results

ITE Group PLC
04 December 2007


4 December 2007

                                 ITE GROUP PLC                                  

                 RECORD RESULTS DRIVEN BY STRONG ORGANIC GROWTH                 

                            PRELIMINARY ANNOUNCEMENT                            


Highlights
 
                                Year ended         Year ended               
                         30 September 2007  30 September 2006               
                                                                            
Revenue                             £99.1m             £82.4m           +20%
                                                                            
Profit before tax                   £33.7m             £24.8m           +35%
                                                                            
Headline pre-tax profit *           £35.3m             £26.0m           +35%
                                                                                                  
Diluted earnings per                  9.0p               6.7p           +31%
share                                                                       
                                                                            
Headline diluted                      9.4p               7.0p           +34%
earnings per share**                                                        
                                                                            
Dividend per share                    4.5p               3.5p           +28%


•         Fifth successive year of record profits

•         Revenue up 20% to £99.1m

•         Headline profits up 35% to £35.3m

•         Good organic growth supported by strong economies of Russia and CIS

•         Strong balance sheet to support future growth opportunities

•         Cash generation £43m - 120% of headline profits

•         £27m of cash returned to shareholders during the year

•         Dividend up 28% to 4.5p reflecting continued confidence in future
          prospects

•         'Like for like' forward sales are up more than 10%

•         Board confident of another strong performance in 2008

 

 

Commenting on the results, Bill Dye, CEO, said:


'ITE continues to capitalise on the strong growth dynamics of our core markets
and sectors. Demand for our events continues to grow and this underpins another
strong set of results driven by organic growth. Where additional space has
become available we have successfully expanded our events. We have also extended
the business through launches and expansion of the international sales
infrastructure.

'The 2008 financial year has started well; the trading environment remains good
and the overseas economies in which we operate continue to grow strongly. Like
for like sales are more than 10% ahead of the comparable sales position a year
ago. We will continue to benefit from the growth in exhibition space in Russia
and CIS and as at 3 December 2007 advance sales for 2008 were £61m. The Board is
confident of another strong financial performance from ITE in 2008 and we are
well positioned to expand our business.'

 

Notes:

* 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 Income statement 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:

Bill Dye                      
Russell Taylor               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 2007

Chairman's statement

Group Performance

ITE has announced an excellent set of results for the year ended 30 September
2007. Reported revenues improved in our stronger biennial year by 20% to £99.1
million and headline profit before tax improved by 35% to £35.3 million (2006:
£26.0 million). Fully diluted headline earnings per share for the year was 9.4p
(2006: 7.0p). Reported profits before tax were £33.7 million (2006: £24.8
million) and fully diluted earnings per share improved by over 30% to 9.0p
(2006: 6.7p).

Strategic Progress
The Group's primary strategy over the last five years has been to maximise the
organic growth opportunities that the Group has earned through strong market
positions in the emerging and developing markets of Russia and Central Asia. Our
success in achieving this aim has come from the single mindedness with which we
have focussed on this objective. As a result ITE has enjoyed five years of
continuous growth in revenues and profits and, reflecting this success, ITE
became a constituent company of the FTSE 250 index in June this year.

Highlights of the year included Mosbuild, the Group's market leading
construction event in Moscow, which this year was the largest commercial
exhibition held in Russia and is today one of the world's leading events of its
kind. The Moscow International Oil and Gas event and the Kazakhstan
International Oil and Gas conference also demonstrated their credentials as
world class events for the international community. Also important this year was
the signing of an agreement extending our venue rights in Almaty, Kazakhstan
through to 2017. This agreement confirms ITE's position in the Kazakhstan
exhibition business at a time of economic health and expansion for the region.

The dedication and loyalty of our hard working staff together with the support
of our venue partners have been important contributors to the overall success of
the Group. Looking forward, I see another year of growth based upon these
relationships and infrastructures we have assiduously built over the last five
years. The balance sheet is strong and the Group is well positioned to take
advantage of any new opportunities that arise in the year.

Board and Management

As previously announced, Ian Tomkins, Chief Executive Officer for the last five
years, stepped down from the Board on 3 September to return to Australia with
his family. He left the Company with a solid foundation and the Group will reap
the benefits of his stewardship. We have been fortunate to recruit Bill Dye, who
succeeds Ian as Chief Executive Officer. Bill's experience encompasses
entrepreneurial business building and corporate management skills of a FTSE 100
company. Bill brings a new dimension to the Company and the Board look forward
to the next stage of ITE's development under his direction.

Sir Jeremy Hanley joined the Board of ITE as a non executive on 12 March 1998
when the Group first listed on the London Stock Exchange. After nearly ten years
of loyal service and hard work Sir Jeremy will, under corporate governance
guidelines, be stepping down from the Board after the Company's next Annual
General Meeting in March. All the Board extend their thanks to Sir Jeremy for
his support and guidance over the years. The search for a new non-executive
director is under way.

Dividend

The Board is recommending to shareholders a final dividend of 3.2 pence per
share (2006: 2.5 pence), making a total dividend for the year of 4.5 pence per
share (2006: 3.5 pence). The total dividend for the year represents an increase
of more than 28% over last year's dividend, which reflects both the strong cash
dynamics of the business and the Board's confidence in its opportunities looking
forward.

Outlook

The markets in which we operate continue to expand and the domestic economies of
the countries in which we trade are still growing strongly. With ITE's strong
brands and expanding international infrastructure, I look forward to another
year of growth for the ITE Group.
 

Iain Paterson
Chairman
3 December 2007

 

Chief Executive's Review

Results for 2007 Financial Year

Turnover for the year was £99.1 million, an increase of 20% over last year
(2006: £82.4 million). Growth from our higher margin products, selective price
increases and good cost control all helped to lift gross margins to 50% in the
year (2006: 46.7%). Organic revenue growth was 15%, earned through running 148
events around the world and selling over 450,000 metres of exhibition space
through our 19 offices.

Headline profit before tax of £35.3 million was 35% ahead of last year's £26.0
million comparable result. The 2007 result includes a net £3.8 million biennial
contribution, largely from the Moscow Oil and Gas event and high organic growth
across the rest of the portfolio. On a like for like basis gross profit was 21%
higher than last year, operating profit was 20% higher than last year and
Headline Profit was 21% higher than last year. Overall this represents an
excellent financial and trading result for the year.

Cash generated from the business in the year before tax was £43.1 million
representing more than 120% of headline profit before tax. After accounting for
tax, the business generated £33.0 million of free cash flow, of which a total
£27.1 million was returned to shareholders through share buybacks and dividends.
The strong cash flow resulted in the Group's cash balances rising from £21.2
million at the beginning of the year to £26.7 million at the end of the year.
ITE's strong balance sheet puts it in a good position to take advantage of
current market conditions.

Strategy

ITE has very strong market positions in geographies enjoying good economic
growth and in which the media and marketing businesses are under represented. My
initial impressions of ITE are that it also has unique assets which have enabled
it to participate so well in the growth that these economic and structural
conditions have generated in recent years.

International sales reach - ITE has a culture throughout, such that each office
sells ITE events to its domestic customer base. In addition to the international
sales offices in Germany and the UK, the domestic ITE offices generate
significant cross border sales within Russia, Central Asia and South Eastern
Europe. No other organiser in Russia and CIS is able to replace this 'sales
reach'.

Established market leading positions - ITE has been organising exhibitions in
these territories for over 15 years. The group has extensive knowledge and
experience of the exhibitions, the exhibitors, the venues and the regions in
which ITE run its business.

Local presence - The Group's offices are locally staffed and are accepted and
acknowledged as part of the local Russian - CIS exhibition market. ITE's staff
have for the most part grown up with the business. Many of them have worked
together on the same shows for many years. Some of them have worked in different
offices at different times. Overall this has created a unique 'family' culture
among the staff of ITE that is unusual in such a geographically diverse
business.

Venue relationships - ITE has been working in partnership with its venues since
the beginning of its business. ITE has provided financial support to build and
extend venues and is now a significant customer to each of its main venues.

These assets make ITE a unique business in the exhibition industry. Allied to
this are the strengths of the exhibition business model. The business is
strongly cash generative and has excellent sales visibility forward. The
position of ITE together with the nature of large established brands create
barriers to entry for any potential competitors.

The Group's principal objectives have been the creation of sustainable growth in
headline earnings per share and the creation of leading positions in each of its
markets. The strategy to deliver these targets was to:

•           Increase revenues from existing offices, both through expansion of
            existing exhibitions and through the launch of new exhibitions.

•           Increase volume sales and maintain the rate achieved per unit
            ('yield') by office.

•           Make incremental 'bolt on' acquisitions in support of our
            objectives.

•           Secure forward venue rights for significant exhibitions.


ITE's 2007 performance against these objectives is set out below:.

•           Revenues have increased 15% on a like for like basis.

•           Volume sales have increased 12% on a like for like basis from
            380,600m2 to 427,700m2. This has been achieved at the same time as 
            an improvement in comparable yields from £206m2 to £210m2 across the 
            Group.

•           There have been no significant acquisitions made in the year.

•           An extension in our venue rights has been signed for our Kazakhstan
            business, and discussions are well advanced to extend our 
            relationship in Uzbekistan.

The Group's priority for cash is to develop ITE's business in line with its
strategy, either through internal investment or by making acquisitions. Surplus
free cash flow is returned to shareholders through dividends and share buybacks.

Trading and Operating Performance in 2007

ITE's growth has been driven by strong performance of its exhibitions that
service the construction and oil and gas sectors. This year saw that trend
continue with revenue growth from the construction exhibitions increasing 25%
and revenue growth from the oil and gas events increasing by 35% (adjusted for
biennial events). There has also been continued growth in the next tier of B2B
events - food, motors and travel notably in the Central Asia regions. These
events have been well established in Moscow and St Petersburg for some time, but
until recently have been less well represented in Central Asia.

Moscow is now much better served in terms of venue facilities than it was a few
years ago and ITE has taken maximum advantage of the opportunity to grow its
business into the new space. However it is still difficult to find suitable
space at the peak times in the calendar and more space will inevitably be built
in response to this underlying demand. St Petersburg remains a static market
with limited options for growth on its site, and a well established ownership of
the main exhibition themes in the region. There are renewed discussions about
new venue projects in St Petersburg which will provide a fresh stimulus to the
industry if and when they are built.

In Central Asia we are recording good growth in the construction and oil and gas
sectors, but also a sustained momentum in the hitherto small travel, food and
auto exhibitions. The largest Central Asian Business is in Kazakhstan where the
venue has expanded steadily over the years, and presently only our construction
event is constrained in its growth. In Azerbaijan the venue is small and not
entirely suitable for our business; ITE is actively searching for a solution to
resolve the situation. In Uzbekistan a new pavilion doubling existing facilities
will pave the way for expansion.

In southern and Eastern Europe, Turkey and Ukraine have both suffered political
unrest in the second half of the year. The weaker Dollar has also had an effect
on revenues in Turkey and the Ukraine and some yield dilution is expected in
both regions in the first half of 2007.

The Group's overall operating metrics for its events business (excluding
publishing) are set out below:
 
                                          Square                     Gross     Average yield              
                                     metres sold      Revenue       profit     £per sqm       
                                           000's           £m           £m  
          
2006  Results from Events                  425.6         80.6         37.7            
      Non annual 2006                      -45.0         -2.3         -0.4            
2006  'Biennially adjusted'                380.6         78.3         37.3         206
      Acquisitions                           4.7          0.7          0.2            
      'Like for like' growth                47.1         12.0          7.4            
2007  'Biennially adjusted'                432.4         91.0         44.9         210
      Non annual 2007                       22.5          6.4          4.2            
2007  Results from Events                  454.9         97.4         49.1            


In 2007 the Group organised 148 events (2006: 146 events) in fifteen countries
(2006: fifteen countries) from its nineteen dedicated offices. There were
seventeen new events in the year contributing a total £2.5 million in revenue
and £0.4 million in gross profits.

The Group sold 454,900m(2) of exhibition space in 2007 (2006: 425,600m(2)).
After adjusting for the effect of biennial events and acquisitions the Group
achieved a 12% increase in volume sales, a 15% increase in revenues and a 21%
improvement in gross profits from its recurring portfolio.

The average yield across the Group achieved on comparable sales was 2% higher
this year at £210 per m(2) (2006 comparable yield: £206 per m(2)).

Outlook

The economies of the regions where ITE operates are enjoying good economic
growth and the exhibition and media businesses that serve them are larger and
still growing. The additional exhibition space constructed in Moscow and the
Ukraine in 2007 will support growth in the exhibition business for the next two
to three years. ITE has the market leading position in several major
international sectors which are all growing their presence in the economy:
construction, oil & gas, travel, food and automotive - transport. There remain
opportunities for ITE to improve its presence in other sectors where the Group
is currently less well represented. ITE with its strong infrastructure and
financial resource is well positioned to take advantage of any opportunities to
expand the scope of its business.

Trading for 2008 has started well and like for like sales are again more than
10% ahead of the comparable sales position a year ago. At 3 December 2007
advance sales for 2008 were £61 million. The Board are confident of another
strong performance from ITE in 2008.


Bill Dye
Chief Executive Officer
3 December 2007


Business review - Divisional Review - 2007

'Like for like' growth in revenue was 15% across ITE's total business. The table
below sets out the actual and 'like for like' growth in revenues across the
regions of ITE's business.
                                                                 
                            2007      2006    Actual    'Like for like'                               
                              £m        £m    change     growth     
                                                           
Russia                      63.7      49.9       28%          17%
Central Asia &              17.6      15.4       14%          14%
Caucasus                                                         
Eastern & Southern           7.9       8.3       -5%           7%
Europe                                                           
UK & Western Europe          7.6       7.8       -3%           3%
Rest of World                2.4       1.0      140%         140%
                                                                 
                            99.1      82.4       20%          15%
                                                                 

'Like for like' growth excludes the effect of biennial events, acquisitions and
disposals.

Russia

Offices: Moscow, St Petersburg

Staff employed:             2007: 198

                            2006: 191

Exhibitions organised:      2007: 44

                            2006: 44


Square metres sold (000's): 2007: 250

                            2006: 206



The exhibitions business in Russia has continued to show strong growth in the
year to 30 September 2007. Supported by national GDP growth of 7% and increasing
levels of international trade between Russia and the rest of the world, the
exhibition business has performed exceptionally well. Particularly prominent is
the growth in the construction sector and the continued activity in the oil and
gas sector. The construction sector in particular has benefited from increased
government spending in this pre-election year. At the beginning of the financial
year the two main Moscow exhibition centers, Crocus and Expocentr, offered
between them about 180,000m2 of gross exhibition space. By the end of the
financial year Expocentr had opened their new pavilion 8 - an extra 8,000m2
gross and Crocus had opened their new 90,000m2 pavilion 3, bringing the total of
available exhibition space to about 280,000m2. There are still active
discussions concerning the possibility of a third major exhibition centre in
Moscow; though nothing concrete has yet transpired. In St Petersburg there are
also discussions about plans to build a major new exhibition centre.

In Moscow the exhibition business has been vibrant. ITE's Moscow events in the
biennially strong year were 215,000m2 of solid exhibition space; some 25% more
than in the previous year. Average yields in Moscow improved 10% as ITE made
some selective price increases for the first time in a number of years.
Ingredients Russia is the first of our more significant events and it generated
a 15% increase in space sales to 6,400m2. The travel event, Moscow International
Travel and Tourism took place in March. Revenues and profits earned from the
event were both ahead of the 2006 result despite the event being slightly
smaller than the previous year at 18,500m2 (2006: 19,500m2). Mosbuild takes
place in Expocentr and was the first of ITE's events to make use of the newly
constructed pavilion 8. For the first time in several years the Expocentr part
of the show was able to grow and sold 40,000m2, an additional 5,000m2. Mosbuild
Plus held at the Crocus centre grew by more than 30% and achieved sales of
44,600m2 - and in doing so achieved real improvement in the quality and quantity
of the interiors and decorative sections of the building exhibition. In April
the security event, Moscow International and Protection Security, grew to 6,700m
2 using all available space in its existing venue. This event is moving to
Expocentr in 2008 which will facilitate further growth. Moscow International
Boat Show had its first staging in the Crocus venue this year and achieved a
strong result through the combination of a 10% increase in the size of the show
and a reduction costs achieved at the new venue. Trans Russia is another event
which achieved a 10% uplift in volume sales this year, and is also moving to
Expocentr in 2008 to facilitate its growth in future years. In June the biennial
Moscow International Oil and Gas event returned to our calendar and was another
beneficiary of the new pavilion in Expocentr. Using the new pavilion the event
achieved space sales of 22,400m2 - a 40% increase on the 2005 event.

The Moscow International Motor Show which took place for the second time at
Crocus was a similar size event to the previous edition. The last significant
Moscow event in our calendar was Worldfood Moscow which used the new pavilion 8
and, freed from the space constraints of earlier years, grew by 10% to 
24,500m2.

Amongst successful new launches in the year was the adventure travel show,
Select Travel, which launched in October 2006. One year later in September 2007
the event sold 2,700m2 . Pharmtech was launched in November 2006, from the niche
of a larger event at Expocentr, and has established itself at Crocus. ITE's
joint venture with Messe Frankfurt to run Automechanika Moscow got off to a
successful start in May and will run again in February 2008. This year also saw
the first time for two events acquired from Maxima in June 2005, Expoclean and
Bytchimexpo which were both successfully integrated into ITE's portfolio.

St Petersburg is relatively settled in the confines of the venue that serves the
city. Overall the volume sales of the St Petersburg office were 10% improved on
the prior year and the office made an enhanced financial contribution to the
Group. The main event of the St Petersburg office is the construction event,
Balticbuild, which uses all the space available in the Lenexpo venue and was the
same size as in the previous year. However, profitability improved on the basis
of better yields and higher gross margins achieved on the event.

Looking forward the drivers of the exhibition and media businesses in Russia
show signs of continuing for the future. Our major construction event in Moscow
has a date clash for one of its sectors with a leading German show in 2008.
However overall demand in construction activity remains a buoyant feature of the
Russian economy and we expect the exhibition to continue its growth pattern
after the 2008 event.

Central Asia & Caucasus

Offices: Kazakhstan (Almaty, Astana, Atyrau) Azerbaijan (Baku), Uzbekistan
(Tashkent), Georgia (Tbilisi), Kyrgyzstan (Bishkek), Tajikistan (Dushanbe)

Staff employed:             2007: 191

                            2006: 183

 

Exhibitions organised:      2007: 65

                            2006: 59

 

Square metres sold (000's): 2007: 86

                            2006: 72

 

Kazakhstan, Azerbaijan and Uzbekistan have all enjoyed 12 months of economic
growth with GDP growth of 10%, 30%, and 7% respectively.

Kazakhstan

ITE's businesses in Kazakhstan sold a total of 60,500m2 across all its offices
(2006: 49,900m2). The largest exhibitions are in the construction and the oil &
gas sectors - fairly reflecting the dominant economic themes of the region.
Kazakhstan International Oil & Gas exhibition increased its space sales by 20%
to 9,600m2 and grew its conference revenues by 12%. The two smaller oil and gas
events in Atyrau and Astana also performed well. Construction events grew
strongly across the locations with Kazbuild Spring (4,900m2) and Kazbuild
(13,400m2) both growing in size by over 20%. In the next tier of events
Worldfood Kazakhstan grew to 3,600m2 (2006: 2,600m2) and Kazakhstan
International Travel Fair grew to 2,900m2 (2006: 1,900m2) - both improving gross
margins with their size.

The strength of our relationship with the principal venue in Almaty was endorsed
with ITE signing a new long term agreement with Atakent covering pricing and
priority for our events through to 2017. Atakent constructed a small new
pavilion in the year and extended the space available at the venue by circa
1,500m2. Venue facilities in Astana, Atyrau and Aktau still impede the growth of
the potential exhibition business.

Azerbaijan
The exhibition industry has thrived in Azerbaijan in selling 15,500m2 in the
year, a like for like increase of over 25% in exhibition space sold. The
principal events are again in oil and gas and construction. The Caspian Oil and
Gas exhibition & conference is venue bound and is a relatively mature product -
it produced a similar result to the 2006 event. The construction event,
Bakubuild, grew strongly to 3,900m2 (2006: 3,000m2). Smaller events in telecoms,
cars and food all grew by more than 40% indicating a spreading of economic
growth to a broader range of sectors.

The venue facilities in Azerbaijan remain an impediment to the exhibition
industry achieving larger scale. The existing venue is circa 6,000m2 gross and
doubles as a sports facility. ITE is active in its support of schemes to build a
bigger and more modern complex.

Uzbekistan

The Uzbekistan office in Tashkent sold 11,900m2 of exhibition space in 2007
representing like for like growth of more than 20%. There was no textile event
this year but strong growth was achieved in the Automotor show, the building
event, Uzbuild, and the local oil and gas event.

The venue facility has recently been increased through the construction of a new
pavilion which was unavailable for this year's events will facilitate growth for
the larger events next year.

Eastern and Southern Europe

Offices: Ukraine (Kyiv), Turkey (Istanbul)

Staff employed:             2007: 99

                            2006: 97

 

Exhibitions organised:      2007: 28

                            2006: 32

 

Square metres sold (000's): 2007: 78

                            2006: 104


ITE's offices in these regions are the Kyiv office in Ukraine and two separate
businesses in Istanbul, a wholly owned subsidiary and a 50% share in an
associate business. Both Ukraine and Turkey have had political distractions in
the year but have maintained reasonable economic performance with real GDP
growth in their economies of 7% and 5% respectively.

Ukraine

The Ukraine office has had a mixed year with same events performing
exceptionally and same facing fierce competition. Nevertheless overall growth in
space sales against last year was over 20%. The most impressive performance in
the portfolio was Kyiv Agrithort which, making full use of the new pavilion 3 at
IEC, grew from 9,500m2 to 16,100m2. There are competitive agricultural events in
Ukraine but ITE believe it now holds the premier agricultural exhibition for
international businesses. The events ITE owns in health, travel and food all
enjoyed very good growth in the year. The building event Kyivbuild is facing
strong local competition.

Turkey

ITE's wholly owned subsidiary achieved satisfactory performance in its main
recurring events servicing the optical and stationary industries. The oil and
gas conference performed well and 'like for like' financial contribution was
well ahead of last year. A significant part of the Turkish office activity is in
making outbound sales into the Group's CIS exhibitions, and in this the
performance was exceptional nearly doubling the value of Turkish sales to other
ITE exhibitions.

The contribution of ITF, the Groups 50% associate, was £0.3 million less than
last year. Most of the main events enjoyed an increase in size but the strength
of the Turkish Lira against revenue streams denominated in US Dollars had an
effect on the performance for the year.

Western Europe and UK

Offices: UK (London, Huddersfield), Germany (Hamburg), Holland (Utrecht)

*Staff employed:             2007: 158

                             2006: 155

 

*Exhibitions organised:      2007: 6

                             2006: 7

 

*Square metres sold (000's): 2007: 36

                             2006: 36

 

*of the total staff London and Germany international sales account for 80 staff;
44 staff are London corporate and 34 staff manage the UK fashion magazines and
exhibitions.


The fashion exhibition and publishing business performed well in challenging
market conditions. The mainstream fashion and footwear exhibitions taking place
in Spring and Autumn at Birmingham collectively increased space sales to 34,700m
2 (2006: 33,900m2) which can be regarded as a good performance in an ambiguous
trading environment. As expected the Group cancelled its involvement in the
small London Footwear exhibitions which were sub-scale, and is focusing its
efforts on the market leading fashion events in Birmingham. The publishing
business suffered a small reduction in advertising income fairly evenly across
its four publications. Costs were well controlled and the division's
contribution excluding the London events, was maintained.

Rest of the World

Offices: Algeria (Algiers), China (Beijing, Urumqui)

ITE has run three events this year in Africa. Through its small office in
Algiers ITE enjoyed a successful participation in the SEA 3 National Oil and gas
conference in November 2006. As a result of this ITE are among the preferred
bidders for the next event, due to be held in November 2008.

ITE ran its first owned event in China this year, the West China Build show in
Urumqui in May 2007. The Urumqui office has been established to run exhibitions
in this locality. The ITE Beijing office is primarily sourcing outbound
customers for our Russian and CIS events.

Business review - Finance

Revenue and gross profit

Turnover for the year was £99.1 million (2006: £82.4 million). After making
adjustment for the effect of biennial events this is a 15% improvement over last
year's comparable turnover.

The direct costs of exhibitions were well controlled in 2007 and the gross
margin of 50% was circa 3% higher than the gross margin achieved on last year's
portfolio of events.

Administrative expenses across the Group increased by 14% to £17.6 million. The
increase in overheads stemmed mostly from costs related to the change in Chief
Executive Officer. Additionally the Group's property overhead increased as the
growth in our Moscow office over the last few years necessitated re-location to
bigger and more modern offices. Administrative expenses include an amortisation
charge of £1.6 million (2006: £1.3 million), an 'IFRS 2' charge for expensing
share based payments of £1.6 million (2006: £1.5 million) for expensing share
based payments and net foreign exchange differences of £nil (2006: loss of £0.2
million). Overall, Group administrative expense represented 18% of revenue
(2006: 19%), resulting in net operating margins of 33% (2006: 29%) for the year.

Operating profit was £32.6 million against a prior year profit of £24.0 million.

Headline profit before tax this year of £35.3 million was ahead of last year's
headline profit before tax of £26.0 million and, after adjusting for the effect
of biennial events, represents a 21% increase over the comparable result for
2006.

Other operating income

Other operating income represents rental income earned from subletting surplus
office space, principally at ITE's London offices.

Finance income

Finance income for the year was £1.8 million (2006: £1.4 million). Interest from
bank deposits increased to £1.7 million in the year (2006: £0.8 million) as the
Group held higher average cash balances throughout the year of £29.9 million
(2006: £14.8 million) and benefited from higher interest rates in the U.K.
Finance income includes an unwind of fair value provisions of £0.1m against
venue loans in 2007 (2006: £0.4m).

Finance costs

Finance costs of £0.7 million (2006: £0.6 million) represent the interest cost
of the Group's borrowings in Euro and US Dollar and bank charges. The Group
enters into these borrowing arrangements as part of its currency hedging
activity. At 30 September 2007 the Group had borrowings of €16.2 million, and
US$4.0 million.

Tax charge

The tax charge of £10.8 million represents 32% of profit before tax. This
unusually high tax charge for the year reflects extra costs associated with
withdrawing the distributable reserves from our Russian businesses in the year.

Earnings per share

Basic earnings per share increased to 9.1p (2006: 6.9p). Fully diluted earnings
per share increased to 9.0p from 6.7p in the prior year.

The Group achieved headline diluted earnings per share of 9.4p per share
compared with 7.0p for the year to 30 September 2006. Headline diluted earnings
per share is based upon profit for the financial year before amortisation of
acquired intangible assets and any profits or losses on disposal of Group
undertakings.

Dividends

The Group has recommended a final dividend of 3.2p for 2007, to bring the total
dividend for the year to 4.5p (2006: 3.5p).

Return to shareholders

ITE is committed to maximising shareholder return and is a leading performer in
its sector. ITE's progressive dividend policy has resulted in total dividends in
2007 of 4.5 pence per share, up more than 28% over 2006 (3.5p). Since 2003 the
dividend has increased on a compound basis by more than 40%per year.

Cash flow

Cash generated from operations in the year was £41.6 million (2006: £34.2
million). The principal applications of cash were of £17.5 million on purchasing
shares from the open market (2006: £1.1 million), £0.9 million applied to venue
loans and advances (2006: £7.4 million); £10.4 million was paid in tax; (2006:
£9.1 million); £1.6 million was applied to acquisitions in the year (2006: £3.0
million) and £9.6 million was distributed as dividends (2006: £7.1 million). The
net increase in cash balances at 30 September 2007 was £5.5 million.

Net cash at 30 September 2007 was £26.7 million (2006: £21.2 million). Of the
£26.7 million of cash £3.9 million was held in a trust account, which will be
released before the end of 2007.

Acquisitions & disposals

In September 2007 ITE acquired the Harbin International Winter Sports Show in
China for £50,000.

Further deferred consideration payments were made in relation to the acquisition
of ITE Exhibitions BV and the Gift & Decor events, totalling £0.3 million in the
year.

Balance Sheet

The Group's consolidated balance sheet at 30 September 2007 is summarised in the
table below:
 
                                         Assets   Liabilities    Net assets
                                             £m            £m            £m
                                                                           
Goodwill and intangibles                   38.7             -          38.7
Property, plant and equipment               1.4             -           1.4
Associates                                  1.4             -           1.4
Venue advances                              3.6             -           3.6
Cash                                       40.0        (13.3)          26.7
Current assets and liabilities             35.4        (60.1)        (24.8)
excluding cash and venue                                                   
advances                                                                   
Provisions                                    -         (1.6)         (1.6)
Deferred tax                                1.7         (1.7)             -
                                                                           
Total as at 30 September 2007             122.1        (76.7)          45.4
                                                                           
Total as at 30 September 2006             111.1        (67.4)          43.6


Net assets increased to £45.4 million. The main changes are in intangibles
(decrease of £1.6 million), venue advances (decrease of £3.5 million), net cash
(increase of £5.5 million) and an overall increase through reduced current
liabilities and provisions of £1.8 million.

Investment and capital expenditure

The Group's capital expenditure on plant and equipment for the year was £0.8
million (2006: £0.4 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 non-current and current assets in the balance sheet.

At 30 September 2007 the Group's Sterling value of the outstanding balances of
advance payments and venue loans was £3.6 million (2006: £7.1 million) as
follows:

 
                 30 September           New    Repayments   30 September
                         2006                                       2007
                           £m            £m            £m             £m
                                                                        
Moscow                    2.8             -         (2.8)              -
Kyiv                      1.8             -         (0.5)            1.3
Almaty                    1.0           1.1         (1.1)            1.0
St Petersburg             1.0             -         (0.3)          (0.7)
Uzbekistan                0.2           0.3         (0.1)            0.4
Bulgaria                  0.3             -         (0.1)            0.2
                                                                        
Total                     7.1           1.4         (4.9)            3.6

 

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 2008 and 2011. ITE is not presently
active in Bulgaria and the loan is being repaid in instalments.

Capital

During the year the Company has purchased 10,185,000 shares which were held in
Treasury and then cancelled. The Company has also issued 569,804 ordinary shares
of 1p in the year. Of the total new issues 545,353 were pursuant to the exercise
of options and yielded aggregate consideration of £0.2 million. The remaining
shares were issued as part of Directors' remuneration.

The Employees Share Option Trust ('ESOT') held 1,854,875 (0.7%) of the Company's
issued share capital at the year end (2006: 9,372,100; 3.6%).

Post balance sheet events

There have been no significant post balance sheet events.

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.

 
Consolidated income statement                                  
For the year ended 30 September 2007                           
                                                               
                                                               
                                      2007          2006
                                      £000          £000
Continuing operations                                          
Revenue                               99,134        82,368     
Cost of sales                         (49,397)      (43,885)   
                                                               
Gross profit                          49,737        38,483     
Other operating income                253           278        
Administrative expenses before        (16,032)      (14,112)   
amortisation                                                   
Amortisation of acquired intangibles  (1,603)       (1,330)    
Total administrative expenses         (17,635)      (15,442)   
Profit on disposal of group           -             158        
undertakings                                                   
Share of results of associate         266           564        
                                                               
Operating profit                      32,621        24,041     
Finance income                        1,778         1,368      
Finance costs                         (663)         (621)      
                                                               
Profit on ordinary activities before  33,736        24,788     
taxation                                                       
Tax on profit on ordinary activities  (10,777)      (7,351)    
                                                               
Profit for the period                 22,959        17,437     
                                                               
Attributable to:                                               
Equity holders of the parent          22,978        17,401     
Minority interests                    (19)          36         
                                                               
                                      22,959        17,437     
                                                               
                                                               
Earnings per share (p)                                         
Basic                                 9.1           6.9        
Diluted                               9.0           6.7        
                                                               

 
                                                          
                                                          
                                                          
Consolidated balance sheet                                
30 September 2007                                         
                                     2007       2006
                                     £000       £000
Non-current assets                                        
Goodwill                             34,424     34,406    
Other intangible assets              4,295      5,869     
Property, plant and equipment        1,412      1,269     
Investments in associates            1,358      1,438     
Venue advances and other loans       1,583      3,015     
Deferred tax asset                   1,690      2,022     
                                                          
                                     44,762     48,019    
Current assets                                            
Trade and other receivables          37,372     31,174    
Cash and cash equivalents            39,963     31,883    
                                                          
                                     77,335     63,057    
                                                          
Total assets                         122,097    111,076   
                                                          
Current liabilities                                       
Bank overdraft                       (13,306)   (10,717)  
Trade and other payables             (60,142)   (52,291)  
Provisions                           (824)      (907)     
                                                          
                                     (74,272)   (63,915)  
Non-current liabilities                                   
Provisions                           (754)      (1,367)   
Deferred tax liabilities             (1,671)    (2,145)   
                                                          
                                     (2,425)    (3,512)   
                                                          
Total liabilities                    (76,697)   (67,427)  
                                                          
Net assets                           45,400     43,649    
                                                          
Equity                                                    
Share capital                        2,503      2,609     
Share premium account                871        698       
Merger reserve                       2,746      2,746     
Capital redemption reserve           403        291       
ESOT reserve                         (597)      (3,016)   
Retained earnings                    38,930     40,555    
Own shares held                      -          (1,142)   
Hedge and translation reserve        544        889       
                                                          
Equity attributable to equity        45,400     43,630    
holders of the parent                                     
                                                          
Minority interests                   -          19        
                                                          
Total equity                         45,400     43,649    
                                                          

 
                                                                     
                                                                     
                                                                     
Consolidated cash flow statement                                     
                                                                     
For the year ended 30 September 2007                                 
                                              2007        2006
Cash flows from operating activities          £000        £000
Operating profit from continuing              32,621      24,041
operations                                                           
Adjustments for:                                                     
Depreciation and amortisation                 2,159       1,895
Share based payments                          1,550       1,492      
Other non-cash expenses                       47          208        
(Profit) on sale of fixed asset               (39)        -          
Share of associate profit                     (266)       (564)      
Gain on disposal of subsidiary                -           (158)      
Decrease in provisions                        (1,072)     (213)      
                                                                     
Operating cash flows before movements in      35,000      26,701     
working capital                                                      
Increase in receivables                       (1,230)     (233)      
Increase in payables                          7,748       7,752      
                                                                     
Cash generated from operations                41,518      34,220     
Tax paid                                      (10,324)    (9,064)    
Venue advances and loans                      (929)       (7,422)    
                                                                     
Net cash from operating activities            30,265      17,734     
                                                                     
Investing activities                                                 
Interest received                             1,752       925        
Dividends received from associates            444         422        
Acquisition of businesses                     (359)       (2,923)    
Exercise of Moda Put Option                   (1,030)     -          
Purchase of property, plant and equipment     (783)       (525)      
and computer software                                                
Disposal of property, plant and equipment     142         -          
                                                                     
Net cash generated from investing             166         (2,101)    
activities                                                           
                                                                     
Financing activities                                                 
Dividends paid                                (9,634)     (7,143)    
Interest paid                                 (663)       (621)      
Net cash flow in relation to ESOT shares      2,623       541        
Purchase of own shares                        (17,506)    (1,142)    
Proceeds from issue of share capital          144         634        
                                                                     
Net cash flows from financing activities      (25,036)    (7,731)    
                                                                     
Net increase in cash and cash equivalents     5,395       7,902      
                                                                     
Net cash and cash equivalents at              21,166      13,019     
beginning of period                                                  
Effect of foreign exchange rate changes       96          245        
                                                                     
Net cash and cash equivalents at end of       26,657      21,166     
period                                                               
                                                                     
                                                                     
                                                                     

 

 
                                               2007        2006       
                                               £000        £000       
Comprising:                                                           
Cash and cash equivalents                      39,963      31,883     
Bank overdrafts                                (13,306)    (10,717)   
                                                                      
                                               26,657      21,166     
                                                                      

 

 

 
Consolidated statement of recognised income and expense             
For the year ended 30 September 2007                                
                                                                    
                                                                    
                                                      2007      2006
                                                      £000      £000
                                                                    
Currency translation difference on net                (62)     (197)
investment in subsidiary undertakings                               
Increase in fair value on cash flow hedge              331       356
Tax on items taken directly to equity                1,921       159
                                                                    
Net income recognised directly in equity             2,190       318
                                                                    
Transferred to profit or loss on cash flow           (614)      (22)
hedges                                                              
Implementation of IAS 39                                 -     (500)
                                                                    
Profit for the period attributable to the           22,959    17,437
shareholders                                                        
                                                                    
Total recognised income and expense for the         24,535    17,233
period                                                              
                                                                    
                                                                    
Attributable to:                                                    
Equity holders of the parent                        24,554    17,197
Minority interests                                    (19)        36
                                                                    
                                                    25,535    17,233
                                                                    
                                                                    

 

Notes


1 Basis of preparation

ITE Group plc has prepared its audited annual accounts in accordance with
International Financial Reporting Standards (IFRS).

The financial information set out in the preliminary announcement does not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985, but is derived from those accounts. While the financial information in
this preliminary announcement has been prepared in accordance with International
Financial Reporting (IFRS), this announcement does not itself contain sufficient
information to comply with IFRS. The IFRS accounting policies applied in respect
of the current and prior years have previously been disclosed. Statutory
accounts for the year ended 30 September 2006 have been delivered to the
Registrar of Companies and those for the year ended 30 September 2007 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 Section 237(2) or (3) of the Companies Act 1985.


2 Dividends
                                                                2007       2006
                                                                £000       £000
Amounts recognised as distributions to equity holders in                       
the year:                                                                      
                                                                               
Final dividend for the year ended 30 September 2006 of         6,331      4,602     
2.5p (2005 - 1.85p) per ordinary share                                         
Interim dividend for the year ended 30 September 2007 of       3,303      2,535     
1.3p (2006 -1.0p) per ordinary share                                           
                                                                               
                                                               9,634      7,137     
                                                                               
Proposed final dividend for the year ended 30 September        7,983      6,264     
2007 of 3.2p (2006 - 2.5p) per ordinary share                                  
                                                                               

 

The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements.

Under the terms of the trust deed dated 20 October 1998, the ITE Group Employees
Share Trust, which holds 1,854,875 (2006: 9,372,100) ordinary shares
representing 1% of the Company's called-up ordinary share capital, has agreed to
waive all dividends due to it. Further, no dividends will be paid in respect of
own shares held in treasury.

3 Earnings per share

The calculations of basic and diluted earnings per share are based on the profit
for the financial year of £23.0 million (2006: £17.4 million) and the following
numbers of shares.

 
Number of shares                                    2007              2006
                                        Number of shares  Number of shares
                                                  ('000)            ('000)
Weighted average number of shares:                                        
For basic earnings per share                     251,276           250,485
Effect of dilutive potential ordinary              4,454             8,727
shares                                                                    
                                                                          
For diluted earnings per share                   255,730           259,212
                                                                          

 

Headline earnings per share
Headline diluted earnings per share is intended to provide a consistent measure
of Group earnings on a year on year basis and is 9.4p per share (2006: 7.0p).
The Headline diluted earnings per share is based on the following earnings and
the diluted number of shares in the table above.

Earnings for Headline diluted earnings per         2007       2006
share                                                             
                                                   £000       £000
                                                                  
Profit for the financial year attributable       22,978     17,401
to equity holders                                                 
Amortisation of acquired intangible assets        1,603      1,330
Tax effect of amortisation of acquired            (419)      (315)
intangible assets                                                 
Profit on disposal of group undertakings              -      (158)
                                                                  
                                                 24,162     18,258
                                                                  

 

 

4 Reserves
                        Share  Merger    Capital    ESOT Retained Treasury   Hedge and     Put   Total
                                                         earnings   shares Translation  option        
                      premium reserve Redemption reserve                       Reserve reserve        
                      account            reserve                                                      
                                                                                                      
                         £000    £000       £000    £000     £000     £000        £000    £000    £000
Revised 1 October          38   2,746        291  (3,562)   28,538        -        751  (1,044)  27,758
2005                                                                                                  
Exercise of options       625       -          -     546      117        -           -       -   1,288
Net profit for the          -       -          -       -   17,401        -           -       -  17,401
year                                                                                                  
Dividends paid              -       -          -       -  (7,137)        -           -       - (7,137)
Loss on foreign             -       -          -       -        -        -        (197)      -   (197)
currency translation                                                                                  
of overseas                                                                                           
operations                                                                                            
Share based payments        -       -          -       -    1,492        -           -       -   1,492
Shares issued for          35       -          -       -        -        -           -       -      35
remuneration                                                                                          
Tax on share options        -       -          -       -      159        -           -       -     159
Increase in fair            -       -          -       -        -        -         356       -     356
value of hedging                                                                                      
derivatives                                                                                           
Transfer to income          -       -          -       -        -        -        (22)       -    (22)
Costs related to            -       -          -       -     (15)        -           -       -    (15)
capital reduction                                                                                     
Exercise of put             -       -          -       -        -        -           -   1,044   1,044
option                                                                                                
Own shares held in          -       -          -       -        -  (1,142)           -       - (1,142)
treasury                                                                                              
                                                                                                      
30 September 2006         698   2,746        291 (3,016)   40,555  (1,142)         889       -  41,021

 

 
                            Share  Merger    Capital    ESOT Retained Treasury   Hedge and    Total
                                                             earnings   shares Translation         
                          premium reserve Redemption reserve                       Reserve         
                          account            reserve                                               
                                                                                                   
                             £000    £000       £000    £000     £000     £000        £000     £000
                                                                                                   
1 October 2006                698   2,746        291 (3,016)   40,555   (1,142)        889   41,021
Exercise of options           138       -          -   2,419      208        -           -    2,765
Net profit for the year         -       -          -       -   22,978        -           -   22,978
Dividends paid                  -       -          -       -  (9,634)        -           -  (9,634)
Loss on foreign currency        -       -          -       -        -        -        (62)     (62)
translation of overseas                                                                            
operations                                                                                         
Share based payments            -       -          -       -    1,550        -           -    1,550
Shares issued for              35       -          -       -        -        -           -       35
remuneration                                                                                       
Tax on share options            -       -          -       -    1,921        -           -    1,921
Increase in fair value of       -       -          -       -        -        -         331      331
hedging derivatives                                                                                
Transfer to income                                                                   (614)    (614)
Capital reduction               -       -        112       -        -        -           -      112
Own shares held in              -       -          -       - (18,648)    1,142           -  (17,506)
treasury                                                                                           
                                                                                                   
30 September 2007             871   2,746        403   (597)   38,930        -         544   42,897
                                                                                                   


The Company purchased 10,185,000 shares at a cost of £17,505,140 to be held in
Treasury during the period. These were all cancelled during the year.


Financial calendar
 
Final dividend                    
2007                              
                                  
Ex date           13 February 2008
                                  
Record date       15 February 2008
                                  
Annual General    6 March 2008    
Meeting                           
                                  
Payment date      14 March 2008   
                                  
                                  
                                  
Interim dividend                  
2008                              
                                  
Record date       June 2008       
                                  
Payment date      July 2008       
                                  

 

 

Glossary

 

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.

 

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.

 

'Like for like' or 'organic' revenue growth is the % revenue growth generated
from exhibitions, conferences and new launches excluding significant biennial
events and acquisitions in the year.

 



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