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ITE Group PLC (ITE)

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Monday 19 May, 2008

ITE Group PLC

Interim Results

RNS Number : 7197U
ITE Group PLC
19 May 2008
 




19 May 2008

ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT


Organic growth reflects continued strength of Russian and CIS economies




Six months ended

31 March 2008

Six months ended

31 March 2007

% Change





Turnover

£32.6m

£31.3m

4%





Operating profit*

£6.6m

£4.4m

50%





Headline pre-tax profit**

£4.7m

£5.5m

(14%)





Reported profit before tax 

£3.9m

£4.7m

(17%)





Headline diluted earnings per share***

1.3p

1.5p

(13%)





Diluted earnings per share

1.1p

1.3p

(15%)





Dividend per share

1.6p

1.3p

23%



  • Good organic growth driven by quality of exhibition portfolio in core markets

  • Headline pre-tax profit of £4.7m achieved after a net foreign exchange charge of £2.8m

  • Acquisitions of SFITEX and Siberian Fairs strengthens the Group's position in core markets 

  • Strong balance sheet to support further investment in business

  • Interim dividend increase demonstrates confidence of Board 

  • £92.9m of revenue booked for the full year - 10%+ like for like increase over last year

  • Second half has started well - April events performing at least in line with expectations

  

Iain Paterson, Chairman of ITE Group, commented:


'ITE has performed well in the first half with our established events in our core markets showing good growth. ITE's expertise in its markets together with its local presence has ensured that we have been able to capitalise on continuing strength in the Russian and CIS economies.

 

Consistent with our strategy we have continued to seek acquisitions which are incremental to our core business, and in February we announced the acquisition of the SFITEX security event in St Petersburg. In addition we have developed our plans for the regional expansion of our business in Russia with the recently announced acquisition of Siberian Fairs in NovosibirskSiberia. This will provide us with an excellent platform for the anticipated growth of the exhibition business in Eastern Russia.


The trading pattern of the first half looks set to continue with ITE's events experiencing good demand from exhibitors. The benefit of the strong Euro on revenues in the second half is expected to cancel out the net cost incurred on foreign exchange in the first half, and the key Moscow events held since 31 March have performed at least in line with our expectations. Sales visibility remains good and the Board remains confident of the prospects for the 2008 financial year.'



*    Operating profit for 2007 has been restated for the presentation of financial instruments - see note 1 for details

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



Enquiries:


Russell Taylor

Chief Executive Officer and Group Finance Director


ITE Group plc

020 7596 5000

Charles Palmer/Helen Thomas

Financial Dynamics

020 7831 3113


Interim management report


Overview

Over the first six months of this financial year ITE's business units have experienced continued good trading conditions in the Group's core markets of Russia and the CIS, and the Group's principal events have performed well. The trading environment in Russia and the CIS has not been notably affected by the conditions of the financial markets in Western Europe and the United States and demand for our exhibitions continues to reflect the growth of the underlying economies in which we operate. The financial results for the first six months reflect changes in the timing of some exhibitions and charges for 'mark to market' provisions against derivative instruments arising from the recent appreciation of the Euro against Sterling.


The reported revenue of £32.6m (2007: £31.3m) for the first six months represents a 9% improvement on the like for like result for the same period last year ('like for like' is adjusted for timing effects for events being held in different periods).  Headline pre-tax profit of £4.7m (2007: £5.5m) is stated after a net £2.8m charge for foreign exchange (2007: £0.3m gain). This net cost, which largely relates to the recent strength of the Euro against Sterling, is expected to be matched by an equal benefit to revenues and profits over the full year. There are a number of events which have moved dates, notably the TransRussia transport event, which will be reported in the second half this year. Reported pre-tax profit for the six months was £3.9m (2007: £4.7m). 


The Group continues to implement its strategy of strengthening its position in core markets and industry sectors. In February 2008 the Group announced the acquisition of an annual security event in St Petersburg. Under ITE's ownership, this event will benefit from the Group's international marketing network. On 29 April 2008 the Group announced that it had acquired Siberian Fairs LLC which has strong portfolio of exhibitions in Russia's third largest city, Novosibirsk. ITE's management has anticipated the growth of exhibitions in the regional cities of Russia for some time and the acquisition of Siberian Fairs LLC is the first step in ITE's ongoing regional expansion plan. ITE is presently working with parties who plan to build a new larger and purpose built exhibition facility in Novosibirsk for delivery by 2011. This, when completed, will provide opportunities for the future growth of the Siberian Fairs's portfolio of events.


In Central Asia ITE has advanced $1.5m to support the building of a new 6,000m2 exhibition facility in AtyrauKazakhstan. The facility which is planned to be completed in 2010 will facilitate the future development of ITE's exhibition business in Atyrau. 


The Board remains committed to returning surplus cash to shareholders via dividends and the buyback of shares. As at 31 March 2008 the Group's balance sheet recorded net assets of £39.5m (2007: £40.3m) and net cash balances of £42.3m (2007: £37.4m). The Board intends to return surplus free cash flow of the business after dividends to shareholders, through a rolling share buyback programme in the second half.


Board and Management

Following the unexpected departure of the Group's CEO, Bill Dye in January this year, the Group's Finance Director, Russell Taylor has been acting as Chief Executive Officer and together with Edward Strachan has been responsible for the execution of the Group's plans. The Nomination Committee has carried out an intensive search process and, following that process, has appointed Russell Taylor as the Group's CEO. A Group Finance Director will be appointed in due course but, in the meantime, Russell Taylor will continue to hold both functions.

Sir Jeremy Hanley retired from the Board after 10 years of duty at the Group's AGM in March. He was appointed when the Group first listed on the London Stock Exchange and the Board warmly thanks him for his contribution to the development of ITE Group plc over the last 10 years. Neil England has subsequently been appointed as a non-executive Director and brings to the Group extensive experience of sales and marketing in its core markets of Russia and the CIS regions.  


Dividend 

The Board has approved an interim dividend of 1.6p per share (2007: 1.3p per share). The increase in the interim dividend reflects the Board's commitment to a progressive dividend policy and its confidence in ITE's trading prospects.


Financial Performance

Revenue for the first half increased 9% on a like for like basis compared to last year.  The gross profit margin achieved over the first six months of 42% is an improvement over last year's comparable margin of 38%. This reflects the effect of the stronger Euro on revenues and the cessation of some less profitable events in ITE's portfolio.  Operating profit of £6.6m (2007: £4.4m) is stated after administrative costs of £7.4m (2007: £7.7m) which include a foreign exchange gain of £0.7m (2007: £0.5m gain) and £0.8m of amortisation charges (2007: £0.8m).

 

At 1 October 2007 the Group held €47m of derivative financial instruments extending forward to 31 March 2009. The strength of the Euro against Sterling at 31 March 2008 (€1.26: £1) has required the Group to make 'mark to market' provisions against these financial instruments. At 31 March 2008 the Group had outstanding commitments to sell €29m over the next 12 months and carried a provision against these instruments of £3.1m. Group receipts of Euros are expected to be in excess of €29m over the same period. 


Finance income of £1.1m has increased over last year's figure of £0.9 million, due to higher average cash balances held over the first six months of the year. Finance costs of £3.9m (2007: £0.5m) for the first six months include £3.5m of charges relating to unhedged derivative instruments (2007: £0.2m). This includes the charges related to the £3.1m  'mark to market' provision carried against future derivative instruments.  


Headline pre-tax profits of £4.7m (2007: £5.5m) reflect a good underlying trading performance from the business. The trading result stated before foreign exchange charges (which largely relates to future liabilities) was an improvement of more than 25% in both operating and pre-tax profit over the comparable period for last year.  


Trading Highlights and Review of Operations

In the six months to 31 March 2008 ITE organised 67 events (2007: 62 events) including seven new launch events. Total square metres sold in the first half fell slightly from 163,100m2 last year to 161,100m2 this year, reflecting the Group's decision to withdraw from some marginal exhibitions and the effect of exhibitions changing dates between the first and second halves of the year. A summary analysis of the Group's sales and margins from its exhibitions business is set out below:

 
Square
Metres
‘000
 
Revenue
£m
Gross
Profit
£m
 
First half 2007
163.1
30.4
11.7
Timing differences
(3.8)
(1.3)
(0.5)
Net organic growth
1.8
2.7
2.2
 
              _________
         ________
            ______
First half 2008
161.1
31.8

13.4

 
               

__________

 

 

__________

    

__________

 
 



The Group's overall yield for the six month period is £197 per m² (£186 per m² for the same period last year). The change in yield largely reflects the effect of translating Euro denominated revenues at a more beneficial exchange rate.


Russia

Overall the Russian business achieved similar space sales to last year but produced higher yields, revenues and profits following the withdrawal from some marginal activity and concentration on the growth of its core events. The results include a strong performance from the Moscow International Travel event, which at 20,800m2 reported a 12% increase in space sales. The other principal event taking place in Russia over the first six months of the year, Ingredients Russia performed much as expected selling 5,600m2 (2007: 6,300m2), following a date clash this year with its biennial European competitor. In April TransRussia, which took place in March last year performed exceptionally well growing its space sales by over 30% following its move to larger facilities. The contribution from this event will be reported in the second half this year. There were other good performances from the smaller events in Moscow including the recent acquisition, Expoclean. 


Central Asia & the Caucasus

Over the first six months space sales in Central Asia and the Caucasus were 14% higher than for the same period last year on a like for like basis, with revenues and profits improving by more than 15%. As reported previously the Kazakhstan Oil and Gas event reported a 15% growth in space sales and a matching revenue growth from the related conference. The Group expanded its portfolio of oil and gas conferences with the launch of an oil and gas conference in Turkmenistan, which was a significant success generating revenue of £0.7m and hosting over 650 delegates. Other notable results from the Central Asia portfolio were the continuing strength of the construction events and ongoing growth from the food sector across the portfolio. WorldFood Kazakhstan recorded an increase in space sales of more than 15% and KazBuild Spring, now in its third year, achieved an increase of 13%. In Azerbaijan the main event in the first half was BakuBuild, which is venue constrained and managed a 5% growth in space over last year. The Group is still seeking to find a resolution to the venue issue in Baku which currently inhibits the development of the business in Azerbaijan.  


Southern and Eastern Europe

Overall the Kyiv business reported space sales 8% higher than for the same period last year. The first quarter saw uncertain trading in the autumn events with Worldfood Ukraine and the Information Communication Technology event both reporting space sales marginally behind last year's results. After a change in management the second quarter results resumed the strong growth patterns of previous years. The two largest events in Kyiv both take place in February, and both continued to show good growth over previous editions. AgriHort, the agricultural event, increased its space sales by circa 20% to 19,100m2 and improved its yield simultaneously. ITE's construction event, KievBuild, improved space sales by over 30% to 10,400m2. The last event in the calendar for the first half was the Ukraine International Travel & Tourism event, which in Ukraine's 'year of tourism' was opened by President Yuschenko and increased its size by 10% to 6,700m2


In Turkey, the financial results for the first half were affected by the strength of the Turkish Lira against the US Dollar. Most events in Turkey are priced in US Dollars and as a result reported yields were under pressure for all events. Our 100% owned business, EUF, which held two events in the first half performed well in the circumstances. The ITF business which is 50% owned was also affected by the currency issue but through better control over costs reported improved financial results from a broadly similar trading performance as last year.  


UK and Rest of the World

MODA, the fashion and footwear business, has found itself in adverse market conditions in the first halfFashion is a cyclical exhibition business and ITE's business is performing well against a general downturn in the UK fashion retail trade. The MODA spring event was an unexpected success, with results in line with last year's event despite space sales being 6% lower than last year at 17,200m2. The event was well attended and there was real enthusiasm from visitors and exhibitors alike. The publishing business continued to struggle in the current market conditions. 


Outlook

ITE has completed its busy programme of April events in Moscow. As anticipated last year the construction event, MosBuild, had its growth suppressed this year by a date clash with a large German exhibition. Nonetheless the combined exhibitions of MosBuild and MosBuild+ grew from last year's 84,600m2 to 87,200m2 this year. The Moscow International Security event and TransRussia both benefited from a move to better and larger venue facilities, and grew to 7,600m2 (13% increase) and 8,200m2 (30% increase) respectively. The Moscow International Boat Show and Expoelectronica both recorded growth over last year in space sales and a more significant growth in their revenues. This pattern is repeated throughout the events held in April, which have all reported higher revenue growth than space sales, reflecting, inter alia, the effect of the stronger Euro on the Group's Sterling yields. 


The trading pattern of the first half looks set to continue with ITE's more important events experiencing good demand from exhibitors. The continuing strength of the Euro against Sterling will have an increasingly beneficial effect on sales yields for the rest of the financial year. At current exchange rates we anticipate that the gains in revenue and profits realised over the full year will at least match the net costs incurred on foreign exchange at 31 March 2008. In the longer term a continuing strong Euro will have an overall positive effect on the revenues and profits of ITE's portfolio of events.  


At 12 May 2008 ITE had booked revenue of £92.9m for the full year (£85.8m this time last year). On a like for like basis this represents more than a 10% increase over the same period last year. The second half has started well with the key Moscow events held since 31 March 2008 performing at least in line with our expectations. Sales visibility remains good, and the Board remains confident of the prospects for the full year.



By the order of the board


Acting Chief Executive Officer & Group Finance Director


Russell Taylor


16 May 2008


Disclaimer

The interim management report has been prepared solely to provide additional information to shareholders as a body to assess the Company's strategies and the potential for those strategies to succeed. The interim management report should not be relied on by any other party or for any other purpose.

The interim report includes forward looking statements made by the directors in good faith based on the information available to us up to the time of approving the interim report. These statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward looking information.

Consolidated Income Statement

For the six months ended 31 March 2008




  Six months to 31 March 2008 


  Six months to 31 March 2007  Restated*


Year ended 30 September 2007 Restated* 



Unaudited


Unaudited


Audited


Notes

£000


£000


£000

Continuing operations







Revenue


32,592


31,277


99,134

Cost of sales


(18,973)


(19,243)


(49,397)



__________


__________


__________

Gross profit


13,619


12,034


49,737

Other operating income


141


123


253

   Administrative expenses before amortisation


(6,586)


(6,933)


(15,599)

  Amortisation of acquired intangibles


(777)


(794)


(1,603)

Total administrative expenses


(7,363)


(7,727)


(17,202)

Share of results of associate


248


(23)


266



__________


__________


__________

Operating profit


6,645


4,407


33,054

Finance income

3

1,107


872


1,778

Finance costs

4

(3,866)


(538)


(1,096)



__________


__________


__________

Profit on ordinary activities before taxation


3,886


4,741


33,736

Tax on profit on ordinary activities

6

(1,181)


(1,433)


(10,777)



__________


__________


__________

Profit for the period


2,705


3,308


22,959



__________


__________


__________

Attributable to:







  Equity holders of the parent


2,705


3,327


22,978

  Minority interests


-


(19)


(19)



__________


__________


__________



2,705


3,308


22,959



__________


__________


__________








Earnings per share (p)







Basic

8

1.1


1.3


9.1

Diluted

8

1.1


1.3


9.0



__________


__________


__________



The results stated above relate to continuing activities of the Group.

* Restated for the presentation of financial instruments - see note 1 for details.

Consolidated Statement of Recognised Income and Expense

For the six months ended 31 March 2008




Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007



Unaudited

Unaudited

Audited



£000

£000

£000






Currency translation on net investment in subsidiary undertakings


253

(276)

(62)

(Loss)/gain on cash flow hedge


-

(18)

331

Tax on items taken directly to equity


-

-

1,921



__________

__________

__________

Net income /(expense) recognised directly in equity


253

(294)

2,190






Transferred to profit or loss on cash flow hedges


(51)

(202)

(614)

Profit for the period attributable to the shareholders


2,705

3,308

22,959



__________

__________

__________

Total recognised income and expense for the period


2,907

2,812

24,535



__________

__________

__________






Attributable to:





  Equity holders of the parent


2,907

2,831

24,554

  Minority interests


-

(19)

(19)



__________

__________

__________



2,907

2,812

24,535



__________

__________

__________







Consolidated Balance Sheet

31 March 2008



31 March 2008

31 March 2007

30 September 2007




   Unaudited

Restated Unaudited

Restated  Audited


Notes

£000

£000

£000

Non-current assets





Goodwill


34,497

34,391

34,424

Other intangible assets


4,399

5,021

4,295

Property, plant & equipment


1,483

1,415

1,412

Investments in associates


1,570

1,446

1,358

Venue advances and other loans


1,564

2,588

1,583

Deferred tax asset


1,399

2,323

1,690

Derivative financial instruments

12

-

-

48



___________

___________

___________



44,912

47,184

44,810

Current assets





Trade and other receivables

9

33,549

26,890

37,324

Derivative financial instruments

12

-

104

-

Cash and cash equivalents


43,991

43,656

39,963



___________

___________

___________



77,540

70,650

77,287






Total assets


122,452

117,834

122,097






Current liabilities





Bank overdraft

11

(1,722)

(6,237)

(13,306)

Trade and other payables

9

(75,360)

(66,513)

(59,483)

Derivative financial instruments

12

(3,147)

(86)

(610)

Provisions


(550)

(1,025)

(824)



___________

___________

___________



(80,779)

(73,861)

(74,223)

Non-current liabilities





Provisions 


(674)

(1,284)

(754)

Deferred tax liabilities


(1,464)

(2,215)

(1,671)

Derivative financial instruments

12

-

(140)

(49)



___________

___________

___________



(2,138)

(3,639)

(2,474)






Total liabilities


(82,917)

(77,500)

(76,697)








___________

___________

___________

Net assets


39,535

40,334

45,400



___________

___________

___________

Equity





Share capital

13

2,527

2,609

2,503

Share premium account


2,108

727

871

Merger reserve


2,746

2,746

2,746

Capital redemption reserve


403

291

403

ESOT reserve


(2,829)

(1,658)

(597)

Retained earnings


33,834

38,795

38,930

Own shares held


-

(3,566)

-

Hedge and translation reserve


746

390

544



___________

___________

___________

Total equity


39,535

40,334

45,400



___________

___________

___________


Consolidated Cash Flow Statement 

For the six months ended 31 March 2008




Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007



   Unaudited

Restated Unaudited

Restated  Audited



£000

£000

£000

Cash flows from operating activities





Operating profit from continuing operations


6,645

4,407

33,054

  Adjustments for:





Depreciation and amortisation


1,079

1,065

2,159

Share-based payments


425

591

1,550

Other non-cash expenses


(860)

791

47

Loss/(profit) on sale of fixed asset


6

-

(39)

Share of associate (profit)/loss


(248)

23

(266)

(Decrease)/Increase in provisions


(440)

202

(1,072)



__________

__________

__________

Operating cash flows before movements in working capital


6,607

7,079

35,433

Decrease/(increase) in receivables


6,017

2,819

(1,480)

Increase in payables


15,837

14,457

7,565



__________

__________

__________

Cash generated from operations


28,461

24,355

41,518

Tax paid


(1,435)

(3,294)

(10,324)

Venue advances and loans


(740)

(728)

(929)



__________

__________

__________

Net cash from operating activities


26,286

20,333

30,265






Investing activities





Interest received


1,107

872

1,752

Derivative financial instruments


(993)

-

-

Dividends received from associates


-

-

444

Acquisition of business


(680)

(84)

(359)

Exercise of Moda Put option


-

-

(1,030)

Purchase of property, plant & equipment and computer software



(548)


(342)


(783)

Disposal of property, plant and equipment


-

-

142



__________

__________

__________

Net cash (used in) / from investing activities


(1,114)

446

166






Financing activities





Dividends paid 


(7,967)

(6,316)

(9,634)

Interest paid


(387)

(312)

(663)

Net cash flow in relation to ESOT shares


(2,129)

1,811

2,623

Purchase of own shares


-

-

(17,506)

Proceeds from issue of share capital


1,243

11

144



__________

__________

__________

Net cash flows from financing activities


(9,240)

(4,806)

(25,036)






Net increase in cash and cash equivalents


15,932

15,973

5,395






Net cash and cash equivalents at beginning of period


26,657

21,166

21,166

Effect of foreign exchange rates


(320)

280

96



__________

__________

__________

Net cash and cash equivalents at end of period


42,269

37,419

26,657



__________

__________

__________




31 March 2008

31 March 2007

30 September 2007



Unaudited

Unaudited

Audited



£000

£000

£000

Comprised of:





Cash and cash equivalents


43,991

43,656

39,963

Bank overdrafts


(1,722)

(6,237)

(13,306)



__________

__________

__________



42,269

37,419

26,657



__________

__________

__________

Notes to the Interim Financial Statements

1. Basis of preparation

    

The condensed consolidated interim financial statements are the results for the six months ended 31 March 2008. The condensed consolidated interim financial statements ('interim financial statements') have been prepared under International Financial Reporting Standards ('IFRS') as adopted by the European Union, in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority. 


The interim financial statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985 as they do not include all of the information required for full statutory accounts. The interim financial statements should be read in conjunction with the statutory accounts for the year ended 30 September 2007, which were prepared in accordance with IFRS as adopted by the European Union and have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.


Accounting policies

The interim financial statements have been prepared on the basis of the accounting policies and methods of computation applicable for the year ending 30 September 2008. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2007 except for the changes in accounting policy described below


Change in accounting policies


IFRS 7 'Financial instruments: Disclosures'

In the current financial year, the Group will adopt IFRS 7 'Financial instruments: Disclosures' for the first time. As IFRS 7 is a disclosure standard, there is no impact of this change in accounting policy on the interim financial statements.


Gains and losses on derivatives not in designated and effective hedging relationships

During the 2007/2008 financial year, ITE Group plc has changed its accounting policy in relation to the income statement disclosure of fair value gains and losses on derivatives not in designated and effective hedging relationships. Previously, ITE Group plc reported these fair value gains and losses in 'Administrative expenses' in the income statement. As a result of the change in policy, these fair value gains and losses are now disclosed as part of 'Finance income/costs'. Management judges that this policy provides a fairer presentation of administrative expenses and a clearer presentation of derivatives in the financial statements. The comparative interim financial statements for 2007 and the comparative prior year end financial statements for 2007 have been restated. The effects of these changes on the comparative figures are:

  • 31 March 2007: Increase in 'Finance costs' of £0.2 million and a resulting decrease in 'Administration expenses'. 

  • 30 September 2007: Increase in 'Finance costs' of £0.4 million and a resulting decrease in 'Administration expenses'.


Presentation of derivative financial instruments in the balance sheet

In light of the change of accounting policy above and the movement in the value of derivative instruments in the period, the Group has also amended the balance sheet presentation of derivative financial instruments. Previously, the fair value of derivatives was shown in 'Other debtors/other creditors', but is now presented as a separate balance sheet caption on the face of the balance sheet. Management believes that this presentation provides a clearer picture of the derivative instruments used by the Group. This presentational change has resulted in a restatement of the comparative interim financial statements for 2007 and the comparative prior year end financial statements for 2007. The effect of these changes on the comparative figures are:

  • 31 March 2007Decrease in 'Other debtors' of £0.1 million and a decrease in 'Other creditors' of £0.2 million and a resulting increase in 'Derivative finance instruments'. 

  • 30 September 2007Decrease in 'Other creditors' of £0.7 million and a resulting increase in 'Derivative finance instruments'. 

2Segmental information

The turnover and profit before taxation are attributable to the Group's one principal activity, the organisation of trade exhibitions, conferences and related activities and can be analysed by geographic segment as follows.

Six months ended 31 March 2008

Unaudited

UK & Western Europe

Central Asia & Caucasus

Russia

Eastern & Southern Europe

Rest of World

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities 







Turnover 

3,801

10,700

10,770

6,986

335

32,592








Result

(4,129)

4,999

2,898

2,918

(289)

6,397


________

________

________

________

________

_______

By origin of sale







Turnover

20,552

4,094

4,645

3,172

129

32,592








Result

4,988

592

195

601

21

6,397


_______

________

________

_______

________


Share of results of associates






248







_______

Operating profit






6,645

Finance income






1,107

Finance costs






(3,866)







_______

Profit before tax






3,886

Tax






(1,181)







_______

Profit after tax






2,705







________

Capital expenditure

308

51

186

3

-

548

Depreciation and amortisation

877

59

136

7

-

1,079








Balance Sheet







Assets

83,704

6,968

27,188

2,972

50

120,882


_______

_______

_______

_______

_______


Investment in associates






1,570







_______

Consolidated total assets






122,452







________

Liabilities

(48,596)

(5,134)

(26,785)

(2,346)

(56)

(82,917)


________

________

________

________

________

_______









Six months ended 31 March 2007 - Restated

Unaudited

UK & Western Europe

Central Asia & Caucasus

Russia

Eastern & Southern Europe

Rest of World

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities 







Turnover 

3,924

8,092

11,788

6,227

1,246

31,277








Result

(4,057)

3,267

2,501

2,610

109

4,430


________

________

________

________

________

_______

By origin of sale







Turnover

18,088

3,061

7,001

2,748

379

31,277








Result

4,318

449

(1,072)

640

95

4,430


_______

________

________

_______

________


Share of results of associates






(23)







_______

Operating profit






4,407

Finance income






872

Finance costs






(538)







_______

Profit before tax






4,741

Tax






(1,433)







_______

Profit after tax






3,308







________

Capital expenditure

77

81

189

(5)

-

342

Depreciation and amortisation

924

31

105

5

-

1,065








Balance Sheet







Assets

83,050

5,364

26,526

1,428

20

116,388


________

________

________

________

________


Investment in associates






1,446







_______

Consolidated total assets






117,834







________

Liabilities

(48,133)

(4,257)

(24,276)

(767)

(67)

(77,500)


________

________

________

________

________

_______









Year ended 30 September 2007 - Restated

Audited

UK & Western Europe

Central Asia & Caucasus

Russia

Eastern & Southern Europe

Rest of World

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities 







Turnover 

10,624

18,082

61,706

7,069

1,653

99,134








Result

(6,672)

6,060

31,003

2,445

(48)

32,788


________

________

________

________

________

_______

By origin of sale







Turnover

51,290

8,928

34,492

3,972

452

99,134








Result

18,788

2,191

12,037

(304)

76

32,788


_______

________

________

_______

________


Share of results of associates






266







_______

Operating profit






33,054

Finance income






1,778

Finance costs






(1,096)







_______

Profit before tax






33,736

Tax






(10,777)







_______

Profit after tax






22,959







________

Capital expenditure

255

154

361

13

-

783

Depreciation and amortisation

1,839

68

212

40

-

2,159








Balance Sheet







Assets

95,335

6,137

17,910

1,389

(32)

120,739


________

________

________

________

________


Investment in associates






1,358







_______

Consolidated total assets






122,097







________

Liabilities

(53,299)

(4,798)

(17,180)

(1,333)

(87)

(76,697)


________

________

________

________

________

_______









3.    Finance income


Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007


Unaudited

Unaudited

Audited


£000

£000

£000





Interest receivable from bank deposits

1,100

830

1,720

Interest receivable from Inland revenue repayments

-

28

28

Interest receivable on advances to venues

7

11

4

Unwind of fair value discount on venue advances

-

3

26


__________

__________

__________


1,107

872

1,778


__________

__________

__________


4.    Finance cost


Six months to 31 March 2008

Six months to 31 March 2007 Restated

Year ended 30 September 2007 Restated


Unaudited

Unaudited

Audited


£000

£000

£000





Interest on bank loans and overdrafts

302

231

453

Bank charges

85

81

210

Loss on derivative financial instruments

3,479

226

433


__________

__________

__________


3,866

538

1,096


__________

__________

__________



5.    Reconciliation of headline pre-tax profit to profit on ordinary activities before taxation 



Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007


Unaudited

Unaudited

Audited


£000

£000

£000





Profit on ordinary activities before taxation

3,886

4,741

33,736

Amortisation of acquired intangibles

777

794

1,603


__________

__________

__________

Headline pre-tax profit 

4,663

5,535

35,339


__________

__________

__________


6.    Taxation


Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007


Unaudited

Unaudited

Audited


£000

£000

£000

Current tax




   UK corporation tax

585

1,002

4,897

  Foreign tax

512

646

6,026


__________

__________

__________


1,097

1,648

10,923

Deferred tax

84

(215)

(146)


__________

__________

__________

Tax on profit on ordinary activities 

1,181

1,433

10,777


__________

__________


__________

    Tax at the interim is charged at 30% (2007: 30%) representing the best estimate of the weighted average annual corporation tax expected for the financial year.


7.    Dividends


Six months to 31 March 2008

Six months to 31 March 2007

Year ended 30 September 2007


Unaudited

Unaudited

Audited


£000

£000

£000

Final dividend for the year ended 30 September 2007 of 3.2p




  (2006:2.5p) per ordinary share

8,045

6,331

6,331


__________

__________

   __________

Interim dividend for the year ended 30 September 2007 of 1.3p




  per ordinary share



3,303




__________

Proposed interim dividend for the year ended 30 September 




  2008 of 1.6p (2007:1.3p)

3,995

3,312



__________

__________



The proposed interim dividend was approved by the board on 14 May 2008 and has not been included as a liability as at 31 March 2008.

8.    Earnings per share

    

    The calculations of earnings per share are based on the following results and numbers of shares.


Headline diluted

Basic and diluted


Six months 

to 31 March

Unaudited

Six months 

to 31 March

Unaudited


Year ended 30 September Audited

Six months 

to 31 March

Unaudited

Six months 

to 31 March

Unaudited


Year ended 30 September Audited

2008

2007

2007

2008

2007

2007


£000

£000

£000

£000

£000

£000







Profit for the financial period

2,705

3,327

22,978

2,705

3,327

22,978

Amortisation of acquired intangibles

777

794

1,603

-

-

-

Tax effect of amortisation

(214)

(157)

(419)

-

-

-


________

________

________

______

________

________


3,268

3,964

24,162

2,705

3,327

22,978


________

________

________

______

________

________




Six months to 31 

March 2008

Six months to 31 March 2007

Year ended 30 September 2007



Number of shares

('000)

Number of shares ('000)

Number of shares ('000)

Weighted average number of shares:





For basic earnings per share


249,914

253,505

251,276

Dilutive effect of exercise of share options


2,552

7,382

4,454



___________

___________

___________

For diluted earnings per share


252,466

260,887

255,730



___________

___________

___________


Headline diluted earnings per share is intended to provide a consistent measure of group earnings on a year on year basis. Headline diluted earnings per share is calculated using profit for the financial year before amortisation and impairment of goodwill and profits or losses arising on disposal of group undertakings.

9. Current assets and current liabilities 

Trade and other receivables include trade debtors of £16.9m (31 March 2007: £14.9m; 30 September 2007: £26.8m) and venue advances and other loans of £2.0m (31 March 2007: £2.6m; 30 September 2007: £2.0m).

During the period, £3.8m held in a trust account as a result of the capital reduction in July 2005, was released leaving £81,000 held in trust. 

Trade and other payables include deferred income of £65.7m (31 March 2007£55.8m; 30 September 2007: £46.2m).

 10Acquisition of business

On the 29 February 2008 the Group completed the acquisition for a cash consideration of Roubles 30 million (£0.6m) of a small fire and protection event in St Petersburg, Sfitex. This event is complementary to the Moscow International Protection and Security event already owned by ITE and strengthens the Group's portfolio in this growing sector. The event will next be held in October 2008 and no revenues or profits have been recognised in the condensed consolidated income statement for the six months to March 2008.  If the acquisition had taken place at the beginning of the financial year, it is estimated that Group revenues for the period would have been $0.9m higher and the Group profit before tax would have been $0.3m higher.

11. Bank overdraft

The bank overdraft is repayable on demand. 100% of the borrowing is denominated in US Dollars. The borrowings are arranged at floating interest rates, thus exposing the Group to cash flow interest risk. The overdraft is taken out to act as a partial hedge against the UK trade receivables in US Dollars.

12. Foreign currency derivatives

The Group utilises foreign currency derivatives to hedge significant future transactions and cash flows. The Group is party to foreign currency forward-plus contracts in the management of its exchange rate exposures. The instruments purchased are denominated in Euros which represents the Group's primary billing currency.

Under the forward-plus contract, the Group has a right but not an obligation, to sell Euros for Sterling at a specified rate range at specified dates. However, if the spot rate is at or below the specified barrier rate on any business day during the barrier period the right to sell Euros becomes an obligation, at the specified strike rate. As at 31 March 2008, the spot rate was below the barrier rate for all of the instruments.

As at 31 March 2008 the notional amounts of outstanding foreign currency forward-plus contracts that the Group has committed to are as follows:


Six months to 31 March 2008

Unaudited

Six months to 31 March 2007

Unaudited

Year ended 30 September 2007 Audited


€000

€000

€000





Foreign currency forward-plus contracts

29,000

18,000

41,000


__________

__________

__________


These arrangements cover exchange exposures over the next 12 months, with €11 million covering exposures after September 2008. These instrument have either not been designated as hedging instruments, or are inefficient hedge instruments and, as such, any changes in its fair value are being recorded in the income statement. 

At 31 March 2008, the fair value of these derivatives is estimated to be a liability of approximately £3.1 million (31 March 2007: asset of £0.1 million and liability of £0.2 million; 30 September 2007: liability of £0.7 million). This is based on market valuations. There are no amounts deferred in equity at 31 March 2008 for these instruments.

13. Share capital


Six months to 31 March 2008 Unaudited

Six months to 31 March 2007 Unaudited

Year ended 30 September 2007 

Audited


£000

£000

£000

Authorised




375,000,000 ordinary shares of 1 penny each (31 March 2007: 375,000,000)    

3,750

3,750

3,750


__________

__________

__________

Allotted and fully-paid




252,689,987 ordinary shares of 1 penny each (31 March 2007: 260,931,821)

2,527

2,609

2,503


__________

__________

__________


During the period, the Company allotted 2,365,646 ordinary shares of 1 penny each pursuant to the exercise of share options. 10,347 ordinary shares were issued in respect of Director's remuneration. The total consideration for the shares issued was £1,260,604. 

The Company has one class of ordinary shares which carry no right to fixed income.

14.  Events after the balance sheet date

On the 29 April 2008 the Group announced the acquisition for a total cash consideration of $12.1 m of 100% of the issued share capital of Siberian Fairs LLC, an exhibitions business based in SiberiaThe acquisition further strengthens ITE's core activities in the growing markets of Russia and the CIS and is highly complementary to the sector profile of the Group's exhibition portfolio. 

Siberian Fairs LLC is based in NovosibirskSiberia and owns a comprehensive portfolio of 30 exhibitions servicing business requirements of the Novosibirsk region. The largest exhibitions are in Construction, Furniture & Interiors, Motor, Food Products & Packaging and Agriculture. The business has around 160 employees and in 2007 it generated revenue of approximately US$10m and profit before tax of approximately US$3.5 million. Gross assets of approximately US$1m were acquired as part of the transaction.  

15. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2008. Transactions between the Group and its associates, where relevant, are disclosed below. 

Trading transactions
Ceyda Erem, a former director of ITE Group plc, has a controlling interest in CNR, a company that manages the largest exhibition halls in Istanbul. During the six months to 31 March 2008, ITF, the Group's associate, was charged £1.9 million by CNR for rent, hall services such as electricity, security and advertising and stand construction (2007: £2.4 million). At 31 March 2008, CNR owed ITF £0.5 million (31 March 2007: £1.4 million30 September 2007: £1.1 million).  

In Kazakhstan, ITECA, a Group subsidiary, has transacted with Datacom and Saban Holdings for the provision of web systems and office rental respectively.  Edward Strachan, a Group Director, is a significant shareholder of Datacom and Saban Holdings. In total, the services charged to ITECA were £39,000 (31 March 2007: £22,00030 September 2007: £57,000).  

In St Petersburg, Primexpo, a Group subsidiary, has transacted with Cavalry House for the provision of office rental. Edward Strachan, a Group Director, is a significant shareholder of Cavalry House. In total, the services charged to Primexpo were £88,000 (31 March 2007£68,00030 September 2007: £114,000).  

16.    Principal risks and uncertainties


The Group identifies and monitors the key risks and uncertainties affecting the Group and runs the business in a way that minimises the impact of such risks where possible. There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. These risks are detailed below and in our most recent annual report

Political uncertainty and regulatory risk

The Group's business is principally carried out in Russia and the CIS. Changes in law or the regulatory environment could have an effect on some or all of the exhibitions of the Group. ITE has reduced the risk by establishing its business as independent Russian and CIS companies fully contributing to the local economy.  

Commercial relationships

The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future. These key relationships are regularly reviewed and the Group seeks to maintain its exhibition rights for at least three years forward for significant exhibitions.

Venue availability

Damage or unavailability of a particular venue could impact the Group's short-term trading position. Accordingly, the Group carries business interruption insurance policies which protect profits of its major events against such an occurrence in the short term.

Competitor risk

Competition has existed in ITE's markets for some years. ITE faces competitive pressures on a market-by-market basis. 

People

ITE's employees have long-standing relationships with customers and venues, and a unique knowledge of the exhibitions business. Loss of key staff to a competitive event could impact the short-term prospects of a specific event or sector. ITE has sought to build loyalty in its staff by ensuring remuneration is competitive and through a wide distribution of the Group's long-term incentive plans.

Financial risk

The Group also faces financial risks; the key risk being 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. 

The bulk of the Group's business is in emerging and developing 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 at the date of settling invoices.  The Group uses derivative instruments and currency borrowings to protect itself against the effect of currency fluctuations on forward sales and its balance sheet. 

Responsibility statement


We confirm that to the best of our knowledge:

 

(a)  the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

 

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (Indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).




By the order of the board



Acting Chief Executive Officer & Group Finance Director


Russell Taylor


16 May 2008

Independent Review Report to ITE Group plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 which comprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.


This report is made solely to the company in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.


Directors' responsibilities


The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.


As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.


Our responsibility


Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.


Scope of Review 


We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Conclusion


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.




Deloitte & Touche LLP

Chartered Accountants and Registered Auditor

16 May 2008

LondonUK

Directors and professional advisers

Directors

Iain Patersonnon-executive Chairman

Russell TaylorActing CEO & Group Finance Director

Michael Hartley, non-executive Director

Edward Strachanexecutive Director

Malcolm Wall, non-executive Director

Neil England, non-executive Director


Company Secretary

Russell Taylor


Registered office

ITE Group Plc

105 Salusbury Road

LondonNW6 6RG


Registration number                

1927339

Auditors            

Deloitte & Touche LLP

2 New Street Square

London EC4A 3BZ


Solicitors                

Olswang

90 High Holborn

LondonWC1V 6XX


Principal Bankers

Barclays

27 Soho Square

LondonW1A 4WA


Company Brokers

Numis Securities Limited

The London Stock Exchange Building

10 Paternoster Square

LondonEC4M 7LT


Registrars

Capita Registrars

Northern House

Woodsome Park

Fenay Bridge

Huddersfield

West YorkshireHD8 0LA


Public Relations

Financial Dynamics

Holborn Gate

26 Southampton Buildings

LondonWC2A 1PB


Website

www.ite-exhibitions.com



Financial calendar


Interim dividend

Record date                        30 May 2008

Payment date                        20 June 2008


Final dividend

Record date                        February 2009

Payment date                        March 2009

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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