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ITE Group PLC (ITE)

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Monday 17 May, 2010

ITE Group PLC

Interim Results

RNS Number : 9991L
ITE Group PLC
17 May 2010
 



 

ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT

Positioned for growth

 

 


Six months to

31 March

2010

Six months to

31 March

2009




Volume sales 

203,600 m2

188,600 m2




Revenue

£39.2m

£43.2m




Pre-tax profit

£5.6m

£11.1m




Headline pre-tax profit*

£6.4m

£13.3m




Headline pre-tax profit excluding foreign exchange**

£8.5m

£9.4m




Diluted earnings per share

1.7p

3.4p




Headline diluted earnings per share***

2.0p

4.0p




Interim dividend per share

1.7p

1.6p




Net cash

£29.7m

£25.3m

 

·      Headline pre-tax  profit excluding foreign exchange differences of £8.5m (2009: £9.4m)

·      Acquisitions in India, Ukraine and Russia strengthen the Group's event portfolio  and expand market coverage

·      Six events in Turkey acquired from former associate

·      Strong cash flow and net cash as at 31 March 2010 of £29.7m to support further investment

·      £98.1m of revenue booked for the full year - (£103.3m this time last year)

·      Dividend increased by 0.1p  to 1.7p

  

Russell Taylor, CEO of ITE Group plc, commented:

 

"The exhibition industry is late cycle in its response to the economic environment.  As expected, the first half was challenging as the Group traded through the low-point in the economic cycle and our events reflected the full impact of the recession.  The Group has remained focused on the delivery of high-quality events whilst continuing to manage costs, which has helped the gross margin increase by 1% despite a decline in revenues of 9%.  The Group continues to invest in new events, to grow market share and expand its footprint in emerging markets. More recently sentiment has begun to improve slowly with local exhibitors returning, most significantly in Moscow, and signs of international exhibitors returning in larger numbers for our late summer and autumn events.

As at 14 May 2010, ITE had revenue of £98.1m booked for this financial year compared to £103.3m booked at the same time last year.  ITE's principal markets have significant long-term growth potential and events remain the primary route to market for many of our customers.  The Board is confident that ITE is well positioned for growth."

 

 

*  Headline pre-tax profit is defined as profit before tax, excluding amortization of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions & disposals - see note 5 for details.

** Headline pre-tax profit excluding foreign exchange is defined as Headline pre-tax profit excluding foreign exchange loss/gain on operating activities and loss on derivative financial instruments. 

 ***  Headline diluted earnings per share is calculated using profit before amortization of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions and disposals- see note 8 for details.

 

 

Enquiries:

 

Russell Taylor, Chief Executive

Neil Jones, Group Finance Director

 

ITE Group plc

020 7596 5000

Charles Palmer/James Macey-White/Emma Appleton

Financial Dynamics

020 7831 3113



 

Financial Performance

Revenues for the first six months of the year were £39.2m, which as expected was circa 10% less than for the same period last year.  Gross profits of £17.1m were 5% less than for the same period last year, but with an improved gross profit margin. Headline profits before foreign exchange differences were £8.5m compared to £9.4m over the same period last year.  Most of last year's comparable result was earned through bookings made in the 'pre-crisis' trading environment.

Headline profits before tax of £6.4m were impacted by a £2.1m foreign exchange charge largely caused by Ruble strength against the Euro and Sterling over the first six months of the year.  This is a partial reversal of the net £3.9m gain reported in last year's first half results which was then caused by the relative weakness of the Ruble against the same currencies. 

Reported profits before tax were £5.6m (2009: £11.1m) and fully diluted earnings per share for the first six months were 1.7p (2009: 3.4p). Cash generated from operations over the first six months was £26.6m (2009: £20.4m), of which, £2.9m has been applied to acquisitions and £5.3m in further loans to venues.  At 31 March 2010, the Group held net cash balances of £29.7m (2009: £25.3m).

Business Development

The Group has continued to implement its strategy of expanding its sector and geographic exposure in emerging markets. Consistent with this strategy, in November ITE acquired 70% of an exhibition organiser in Delhi, India which organises events serving the paper and the metals & mining industries. The Group is now looking at new launch and development opportunities in this market.

ITE has now completed its exit from ITF, its 50% associate venture in Turkey by acquiring half of the associate's events for its own portfolio and selling its shareholding in the associate to its former joint shareholder.  As part of the transaction ITE has secured its venue rights for the foreseeable future.  ITE's portfolio of wholly owned events in Turkey now includes exhibitions in the food, furniture, machinery and gifts sectors.  In total, these exhibitions account for 93,000m2 of sales and circa £4.5m of revenue per annum, but the current low sales yield restricts the profit contribution from these events.  Nonetheless, ITE's Turkish business has acquired a new substance and scale in the market. 

On 9 April 2010, ITE's Moscow office acquired Global Expo, a small exhibition business with two events, one serving the meat and dairy industry and the other serving infrastructure suppliers to the construction industry.  These two events which together have annual sales of circa 5,000m2 will be complementary to our food and construction industry interests.

On 30 April 2010, the Group acquired the Aqua-therm exhibitions (serving the Heating, Ventilation and Air Conditioning industries) in Ukraine, Kazakhstan and Azerbaijan.  The principal exhibition was held in May in Kyiv, and had sales this year of circa 14,000m2.  The Kazakhstan and Azerbaijan exhibitions will supplement the existing sales in this sector already serviced by our autumn construction events in these territories.  ITE already has an existing joint venture to run the Aqua-therm exhibition in Moscow which has proved very successful over the last two years, and this new acquisition will help to build more international sales support in this substantial industry sector. 

The Group continues to look for investments which will broaden its sector spread and its geographic footprint in emerging markets and which offer the scope for an international sales presence.

Dividend

The Board has approved an interim dividend of 1.7p per share (2009: 1.6p per share).  The Board retains a progressive dividend policy.



 

Trading highlights and review of operations

 

For events held in the first quarter of the year volume sales were circa 30% less than the equivalent sales for last year, and for events held in the second quarter volume sales were circa 15% lower. Overall like for like volume sales for the first half were 20% down on the same period last year.  More recently new trading patterns have begun to emerge.  Notably, local sales in Moscow have shown signs of improved bookings for future events. Sales in our other Russian-CIS markets are variable with differing results by market and product.  The construction industry outside Moscow mostly remains depressed, but for oil and gas events there are now clear signs that the recovery in oil prices is beginning to improve sentiment. The consumer driven products in our portfolio such as food and travel have proved fairly resilient through the recession.

Over the six months to 31 March 2010, ITE organized 80 events (2009: 91 events). Total square metres sold in the six months were 203,600 (2009: 188,600). A summary of the Group's exhibition business sales and margins is set out below.

 


Square metres sold 000's

Revenue* £'m

Gross profit* £'m

First half 2009

188.6

42.5

17.8

Acquisitions

53.4

3.1

0.8

Net Organic change

-38.4

-7.0

-1.7

203.6

38.6

16.9

 

 

*Excluding publishing activity

 

 

Russia

 

Overall volume sales in Russia for the first six months of the year were 17% lower than last year.

 

In Moscow the autumn events, which were largely untroubled in the prior year, all recorded declines as the full impact of the economic recession was reflected in their results. Conversely, events taking place in ITE's second quarter performed relatively well with the Aqua-therm event showing good growth. The Moscow International Travel & Tourism event, which takes place in March, achieved 19,400m2, a small decline from the prior year's event of 20,200m2.  The performance of this event demonstrates the relative resilience of this sector and the strength of a market leading event. The Moscow team also launched the first of a series of events in Sochi (South-western Russia), leveraging our expertise outside Moscow, and further events are planned for later in the year.

 

St Petersburg experienced a decline in volumes of over 30%, with most of its events taking place in the first three months of the year and measured against strong growth in the comparable season last year.  Trading conditions in St Petersburg remained subdued through the second quarter of the financial year.

 

Novosibirsk experienced similar trading conditions to St Petersburg, but with more events weighted to the second quarter of the financial year, experienced a smaller overall decline in volumes of circa 20% across its portfolio.



 

Central Asia & the Caucasus

 

Consistent with trading patterns seen in our other regions, the market in Kazakhstan continued to be affected by the economic recession, again most notably in the first quarter of the financial year.  Overall Kazakhstan reported a 28% fall in like-for-like volume sales for events taking place the first six months of the year. The Kazakhstan Oil and Gas Exhibition & Conference is one of the Group's ten most profitable events and takes place each October. Exhibition space sales of 7,900m2were down 23% compared to last year's event and conference revenues were similarly affected, both reflecting the changed trading environment.

 

In Azerbaijan and Uzbekistan which exhibited good growth this time last year, there were smaller reductions in sales volumes and some more positive highlights to report.  The Turkmenistan Oil & Gas exhibition and conference continued to grow strongly and the Group has now launched a supporting second event for the market aimed at the Gas sector. In Azerbaijan, the long awaited new exhibition centre is now complete and will be officially opened in time to hold our flagship Caspian Oil & Gas exhibition and conference on 1 June 2010.

 

 

Eastern & Southern Europe

 

In Turkey the Group successfully acquired half the assets of ITF, the Group's former associate company, giving ITE 100% control of six exhibitions. Full ownership presents ITE with the opportunity to influence and improve development of these events, particularly the international participation. The first event held under our direct control was IMOB, a furniture exhibition held in February, which sold 46,100m2, a small increase on the previous event. Overall Turkey has been less severely affected by the global recession than other territories and the Eastern Mediterranean Travel and Tourism event which was acquired in January 2009, performed well reporting good revenue growth on a marginal space decline.

 

In 2009 the Ukrainian economy suffered a 15% reduction in Gross Domestic Product as a result this exhibition market was the most severely affected of ITE's territories in the first half of the year.  The region reported a decline of nearly 50% in sales volumes in comparison to the prior year though this is against strong comparatives for the prior year.  A large part of the shortfall came from the low yielding Agrihort event and profits were not proportionately affected.  As previously annouced the Group acquired Kyiv Aqua-therm on 30 April 2010.  This event is the market leader in its sector in Ukraine and is well positioned to grow with a recovery in the Ukrainian economy.

 

 

UK and Rest of the World

 

MODA, our leading UK fashion event, successfully launched MODA Lingerie at the spring event held in February at the NEC in Birmingham. The new sector which added around 2,000m2 to the event helped MODA to increase volumes and revenue by over 10%. The addition of this new sector was well received by exhibitors and visitors alike and reinforces the market leading position of ITE's fashion brand among mid-market independent fashion retailers.

 

In India the newly acquired subsidiary made an excellent start with a successful edition of its leading event Paperex which serves the domestic paper mill industry and sold over 7,300 m2.  The Group is now focused on evaluating new launch and development opportunities in this market.



 

April 2010 trading

April's trading was in line with our expectations and the sales performance of the principal events taking place in April is set out below.

 


April 2010

April 2009

Mosbuild

62,700m2

74,900m2

Interstroyexpo

6,400m2

9,500m2

TransRussia

7,500m2

7,300m2

Expo-Electronica

5,100m2

5,300m2

 

Outlook

As at 14 May 2010, the Group had booked sales for the financial year of £98.1m (2009 £103.3m).  On a like-for-like basis, volume sales for the full financial year are circa 10% below the comparable figure for last year, though most of the like-for-like shortfall is attributable to events which took place in the first six months.

Trading conditions in our biggest market, Moscow, have turned more positive recently and this is reflected in local sales figures for future events; other Russian and some CIS markets are lagging Moscow's recovery. ITE's market leading events have weathered the recession well and are now operating in a landscape of reduced competition, creating opportunities for the Group to continue to expand its business.  The financial position of the Group remains strong and after completing the April acquisitions referred to earlier the Group has cash balances of over £14m at 14 May 2010.  With indications of an improvement in our markets and the significant longer term growth prospects the Board is confident that ITE is well positioned for growth. 

Going Concern

As stated in note 15 to the condensed financial statements, the directors are satisfied that the Group has sufficient resources to continue to operate for the foreseeable future, a period of not less than 12 months from the date of this report.  Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements. 



 

Condensed Consolidated Income Statement

 

For the six months ended 31 March 2010

 

 

 


  Six months to 31 March 2010


  Six months to 31 March 2009  


Year ended 30        September 2009



Unaudited


Unaudited


Audited









Notes

£000


£000


£000

Continuing operations







Revenue


39,225


43,230


116,730

Cost of sales


(22,175)


(25,280)


(56,432)



__________


__________


__________

Gross profit


17,050


17,950


60,298

Other operating income


144


141


283

     Administrative expenses before amortisation


(9,044)


(9,603)


(17,914)

     Amortisation of acquired intangibles

     Foreign exchange (loss)/gain on operating   activities


(2,080)

(2,063)


(2,108)

5,095


(4,311)

3,922

Total administrative expenses


(13,187)


(6,616)


(18,303)

Share of results of associate


126


638


663



__________


__________


__________

Operating profit


4,133


12,113


42,941

Gain on disposal of associate

9

834


-


-

Investment revenue

3

864


438


619

Finance costs

4

(245)


(1,407)


(2,108)



__________


__________


__________

Profit on ordinary activities before taxation

5

5,586


11,144


41,452

Tax on profit on ordinary activities

6

(1,452)


(3,120)


(10,790)



__________


__________


__________

Profit for the period


4,134


8,024


30,662



__________


__________


__________

Attributable to:







      Owners of the Company


4,104


8,083


30,435

      Non-controlling interests


30


(59)


227



__________


__________


__________



4,134


8,024


30,662



__________


__________


__________








Earnings per share (p)







Basic

8

1.7


3.4


12.8

Diluted

8

1.7


3.4


12.7



__________


__________


__________

 

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



Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2010

 


Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009


Unaudited

Unaudited

Audited






£000

£000

£000





Profit for the period attributable to shareholders

4,134

 

8,024

30,662

Cash flow hedges:

Gains/losses during the period

 

1,418

 

(4,203)

 

(1,745)









Exchange differences on translation of foreign operations

4,808

(3,801)

(1,254)

Put option at fair value

(2,065)

(1,354)

(1,351)


__________

__________

__________


8,295

(1,334)

26,312


__________

__________

__________





Tax relating to components of comprehensive income

-

(175)

13

 

Total comprehensive income for the period

 

8,295

 

(1,509)

 

26,325

Attributable to:




     Owners of the Company

8,265

(1,450)

26,098

     Non-controlling interests

30

(59)

227


__________

__________

__________


8,295

(1,509)

26,325


__________

__________

__________


Condensed Consolidated Statement of Changes in Equity

31 March 2010

 

 


Share

Capital

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

 

Retained

Earnings

Put

Option

Reserve

Translation

Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity

 














 


£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 














 

Balance as at 1 October 2009

2,481

2,678

2,746

457

(10,241)

60,519

(4,620)

2,160

(1,745)

54,435

2,272

56,707

 














 

Net profit for the period

-

-

-

-

-

4,104

-

-

-

4,104

30

4,134

 

Currency translation difference on net investment in

subsidiary undertakings

-

-

-

-

-

-

-

4,808

-

4,808

-

4,808

 

Increase  in fair value of hedging derivatives

-

-

-

-

-

-

-

-

1,418

1,418

-

1,418

 

Put option on acquisition of subsidiary

-

-

-

-

-

-

(2,065)

-

-

(2,065)

-

(2,065)

 














 

Total comprehensive income for the period

-

-

-

-

-

4,104

(2,065)

4,808

1,418

8,265

30

8,295

 














 

Issue of share capital

2

-

-

-

-

-

-

-

-

2

-

2

 

Dividends paid

-

-

-

-

-

(9,283)

-

-

-

(9,283)

(244)

(9,527)

 

Exercise of options

-

-

-

-

502

(183)

-

-

-

319

-

319

 

Share-based payments

-

20

-

-

-

654

-

-

-

674

-

674

 

Non controlling interest on acquisition of subsidiary

-

-

-

-

-

-

-

-

-

-

49

49

 


 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2010

2,483

2,698

2,746

457

(9,739)

55,811

(6,685)

6,968

(327)

54,412

2,107

56,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Share

Capital

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

 

Retained

Earnings

Restated

Put

Option

Reserve

Translation

Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity















£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000














Balance as at 1 October 2008

2,479

2,669

2,746

457

(8,390)

42,776

(3,269)

3,414

-

42,882

1,194

44,076

Effect of change in accounting policy

-

-

-

-

-

(90)

-

-

-

(90)

-

(90)


2,479

2,669

2,746

457

(8,390)

42,686

(3,269)

3,414

-

42,792

1,194

43,986

As restated













Net profit for the period

-

-

-

-

-

8,083

-

-

-

8,083

(59)

8,024

Currency translation difference on net investment in

subsidiary undertakings

-

-

-

-

-

-

-

(4,378)

-

(4,378)

-

(4,378)

Increase  in fair value of hedging derivatives

-

-

-

-

-

-

-

-

(3,021)

(3,021)

-

(3,021)

Put option on acquisition of subsidiary

-

-

-

-

-

-

(1,354)

-

-

(1,354)

-

(1,354)

Other comprehensive income for the period

-

-

-

-

-

(32)

-

-

-

(32)


(32)














Total comprehensive income for the period

-

-

-

-

-

8,051

(1,354)

(4,378)

(3,021)

(702)

(59)

43,225














Issue of share capital

2

-

-

-

-

-

-

-

-

2

-

2

Dividends paid

-

-

-

-

-

(8,809)

-

-

-

(8,809)

-

(8,809)

Exercise of options

-

-

-

-

-

(817)

-

-

-

(817)

-

(817)

Share-based payments

-

9

-

-

-

651

-

-

-

660

-

660

Deferred tax charged to equity

-

-

-

-

-

(175)

-

-

-

(175)

-

(175)

Purchase of shares

-

-

-

-

(2,375)

-

-

-

-

(2,375)

-

(2,375)

Recognition and transfer of cash flow hedgers

-

-

-

-

-

-

-

-

(1,182)

(1,182)

-

(1,182)

Non controlling interest on acquisition of subsidiary

-

-

-

-

-

-

-

-

-

-

851

851


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2009

2,481

2,678

2,746

457

(10,795)

41,587

(4,623)

(964)

(4,203)

29,394

1,986

31,380


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Share

Capital

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

 

Retained

Earnings

Restated

Put

Option

Reserve

Translation

Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity















£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000














Balance as at 1 October 2008

2,479

2,669

2,746

457

(8,390)

42,776

(3,269)

3,414

-

42,882

1,194

44,076

Effect of change in accounting policy

-

-

-

-

-

(90)

-

-

-

(90)

-

(90)














As restated

2,479

2,669

2,746

457

(8,390)

42,686

(3,269)

3,414

-

42,792

1,194

43,986

Net profit for the period

-

-

-

-

-

30,435

-

-

-

30,435

227

30,662

Currency translation difference on net investment in

subsidiary undertakings

-

-

-

-

-

-

-

(1,254)

-

(1,254)

-

(1,254)

Increase  in fair value of hedging derivatives

-

-

-

-

-

-

-

-

(563)

(563)

-

(563)

Put option on acquisition of subsidiary

-

-

-

-

-

-

(1,351)

-

-

(1,351)

-

(1,351)














Total comprehensive income for the period

-

-

-

-

-

30,435

(1,351)

(1,254)

(563)

27,267

227

27,494














Issue of share capital

2

-

-

-

-

-

-

-

-

2

-

2

Dividends paid

-

-

-

-

-

(12,600)

-

-

-

(12,600)

-

(12,600)

Exercise of options

-

-

-

-

1,318

(1,115)

-

-

-

203

-

203

Share-based payments

-

9

-

-

-

1,100

-

-

-

1,109

-

1,109

Deferred tax charged to equity

-

-

-

-

-

13

-

-

-

13

-

13

Shares issued for remuneration

-

-

-

-

24

-

-

-

-

24

-

24

Purchase of shares

-

-

-

-

(3,193)

-

-

-

-

(3,193)

-

(3,193)

Recognition and transfer of cash flow hedgers

-

-

-

-

-

-

-

-

(1,182)

(1,182)

-

(1,182)

Non controlling interest on acquisition of subsidiary

-

-

-

-

-

-

-

-

-

-

851

851


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 September 2009

2,481

2,678

2,746

457

(10,241)

60,519

(4,620)

2,160

(1,745)

54,435

2,272

56,707


 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheet

31 March 2010 

 

 



31 March 2010

31 March 2009

30 September 2009


 

 

Unaudited

Unaudited

Audited

 


Notes

£000

£000

£000

Non-current assets





Goodwill


49,160

42,926

44,619

Other intangible assets


18,666

17,495

16,007

Property, plant & equipment


1,480

1,578

1,449

Investments in associates


-

1,793

1,840

Venue advances and other loans


6,362

1,444

1,994

Deferred tax asset


1,115

1,330

1,268

Derivative financial instruments

11

229

-

68



___________

___________

___________



77,012

66,566

67,245

Current assets





Trade and other receivables


34,778

31,386

33,859

Tax prepayment


1,418

391

1,056

Cash and cash equivalents


38,247

31,567

32,587

Derivative financial instruments

11

663

-

226



___________

___________

___________



75,106

63,344

67,728






Total assets


152,118

129,910

134,973






Current liabilities





Bank overdraft

10

(8,530)

(6,275)

(9,480)

Trade and other payables


(12,495)

(12,848)

(13,395)

Derivative financial instruments

11

(3,097)

(7,760)

(5,020)

Deferred income


(62,291)

(65,180)

(44,567)

Provisions


(258)

(700)

(203)



___________

___________

___________



(86,671)

(92,763)

(72,665)

Non-current liabilities





 

Provisions


(640)

(546)

(610)

Deferred tax liabilities


(4,294)

(3,602)

(4,134)

Derivative financial instruments

11

(3,994)

(1,619)

(857)



___________

___________

___________



(8,928)

(5,767)

(5,601)






Total liabilities


(95,599)

(98,530)

(78,266)



___________

___________

___________

Net assets


56,519

31,380

56,707



___________

___________

___________

 



31 March 2010

31 March 2009

30 September 2009



Unaudited

Unaudited

Audited

Equity





Share capital

12

2,483

2,481

2,481

Share premium account


2,698

2,678

2,678

Merger reserve


2,746

2,746

2,746

Capital redemption reserve


457

457

457

ESOT reserve


(9,739)

(10,765)

(10,241)

Retained earnings


55, 811

41,587

60,519

Translation reserve


6,968

(964)

2,160

Hedge reserve


(327)

(4,203)

(1,745)

Put option reserve


(6,685)

(4,623)

(4,620)



___________

___________

___________

Equity attributable to equity holders of the parent


54,412

29,394

54,435

Non-controlling interest


2,107

1,986

2,272



___________

___________

___________

Total equity


56,519

31,380

56,707



___________

___________

___________

 

 

 

Condensed Consolidated Cash Flow Statement

 

For the six months ended 31 March 2010

 



Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009



Unaudited

Unaudited

Audited



£000

£000

£000

Cash flows from operating activities





Operating profit from continuing operations


4,133

12,113

42,941

  Adjustments for:





Depreciation and amortisation


2,415

2,543

5,062

Share-based payments


654

650

1,100

Other non-cash expenses


(34)

(169)

121

Share of associate profit


(126)

(638)

(663)

Increase/(decrease) in provisions


3,223

546

(105)



__________

__________

__________

Operating cash flows before movements in working capital


 

10,265

 

15,045

 

48,456

Decrease/(increase) in receivables


(701)

9,216

7,956

Increase in deferred income


17,724

778

(19,835)

(Decrease)/increase in payables


190

(4,595)

775



__________

__________

__________

Cash generated from operations


27,478

20,444

37,352

Tax paid


(2,305)

(4,777)

(11,887)

Venue advances and loans


(5,291)

(1,912)

(5,352)



__________

__________

__________

Net cash from operating activities


19,882

13,755

20,113






Investing activities





Interest received


131

438

619

Derivative financial instruments


94

-

(1,696)

Dividends received from associates


637

208

204

Acquisition of business


(2,867)

(6,886)

(8,012)

Purchase of property, plant & equipment, computer software and other intangibles


 

(541)


(346)

 

(449)



__________

__________

__________

Net cash used in investing activities


(2,546)

(6,586)

(9,334)






Financing activities





Dividends paid


(9,283)

(8,751)

(12,600)

Interest paid


(239)

(216)

(412)

Net cash flow in relation to ESOT shares


-

(3,769)

(3,193)

Proceeds from issue of share capital


22

12

11



__________

__________

__________

Net cash outflows from financing activities


(9,500)

(12,724)

(16,194)






Net (decrease)/increase in cash and cash equivalents


 

(7,836)

 

(5,555)

 

(5,415)






Net cash and cash equivalents at beginning of period


 

23,107

 

29,141

 

29,141

Effect of foreign exchange rates


(1,226)

1,706

(619)



__________

__________

__________

Net cash and cash equivalents at end of period


29,717

25,292

23,107

 

 

 


__________

__________

__________








Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009



Unaudited

Unaudited

Audited



£000

£000

£000

Cash flows from operating activities





Operating profit from continuing operations


4,133

12,113

42,941

  Adjustments for:





Depreciation and amortisation


2,415

2,543

5,062

Share-based payments


654

650

1,100

Other non-cash expenses


(34)

(169)

121

Share of associate profit


(126)

(638)

(663)

Increase/(decrease) in provisions


3,223

546

(105)



__________

__________

__________

Operating cash flows before movements in working capital


 

10,265

 

15,045

 

48,456

Decrease/(increase) in receivables


(701)

9,216

7,956

Increase in deferred income


17,724

778

(19,835)

(Decrease)/increase in payables


190

(4,595)

775



__________

__________

__________

Cash generated from operations


27,478

20,444

37,352

Tax paid


(2,305)

(4,777)

(11,887)

Venue advances and loans


(5,291)

(1,912)

(5,352)



__________

__________

__________

Net cash from operating activities


19,882

13,755

20,113






Investing activities





Interest received


131

438

619

Derivative financial instruments


94

-

(1,696)

Dividends received from associates


637

208

204

Acquisition of business


(2,867)

(6,886)

(8,012)

Purchase of property, plant & equipment, computer software and other intangibles


 

(541)


(346)

 

(449)



__________

__________

__________

Net cash used in investing activities


(2,546)

(6,586)

(9,334)






Financing activities





Dividends paid


(9,283)

(8,751)

(12,600)

Interest paid


(239)

(216)

(412)

Net cash flow in relation to ESOT shares


-

(3,769)

(3,193)

Proceeds from issue of share capital


22

12

11



__________

__________

__________

Net cash outflows from financing activities


(9,500)

(12,724)

(16,194)






Net (decrease)/increase in cash and cash equivalents


 

(7,836)

 

(5,555)

 

(5,415)






Net cash and cash equivalents at beginning of period


 

23,107

 

29,141

 

29,141

Effect of foreign exchange rates


(1,226)

1,706

(619)



__________

__________

__________

Net cash and cash equivalents at end of period


29,717

25,292

23,107



__________

__________

__________






 

 

 



31 March

2010

31 March

2009

30 September 2009



Unaudited

Unaudited

Audited



£000

£000

£000

Comprised of:





Cash and cash equivalents


38,247

31,567

32,587

Bank overdrafts


(8,530)

(6,275)

(9,480)



__________

__________

__________



29,717

25,292

23,107



__________

__________

__________



Notes to the Interim Financial Statement

 

1. General Information and basis of preparation

           

The information for the year ended 30 September 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

The annual financial statements of ITE Group plc are prepared in accordance with IFRS 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.

 

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 2010. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2009 except as described below.

 

Impact of new accounting standards

IFRS 8, Operating Segments

IFRS 8 sets out disclosure requirements concerning an entity's reportable segments, products, services, geographical areas in which it operates and its major customers. IFRS 8 replaces IAS 14, Segmental Reporting. The Group has not been significantly impacted by the adoption of this standard, see note 2 for further details.  

Amendment to IFRS 3, Business Combinations (revised 2008) and IAS 27 Consolidated and Separate Financial Statements (revised 2008)

The most significant changes to the Group's previous accounting policies for business combinations are as follows:

-       Acquisition related costs which previously would have been included in the cost of a business combination are included in administrative expenses as they are incurred;

-       Any pre-existing equity interest in the entity acquired is remeasured to the fair value at the date of obtaining control, with any resulting gain or loss recognised in profit and loss;

-       Any changes in the Group's ownership interest subsequent to the date of obtaining control are recognised directly in equity, with no adjustment to goodwill; and

-       Any changes to the cost of an acquisition, including contingent consideration, resulting from events after the date of acquisition are recognised in profit and loss.  Previously, such changes resulted in an adjustment to goodwill.

The revised standards have been applied to the acquisitions set out in note 9. 

Any adjustments to contingent consideration for acquisitions made prior to 1 October 2009 which result in an adjustment to goodwill continue to be accounted for under IFRS 3(2004) and IAS 27(2005), for which accounting policies can be found in the Group's latest audited financial statements.

£243,000 of transaction costs relating to acquisitions made in the period have been expensed that would previously have been capitalised on the balance sheet (see note 5).      

Amendment to IAS 1, Presentation of Financial Statements

This amendment introduces changes to the way in which movements in equity must be disclosed and requires an entity to disclose each component of other comprehensive income not recognised in profit and loss. The amendment also requires disclosure of the amount of income tax relating to each component of other comprehensive income as well as other minor disclosure amendments.



2. Segmental information

The revenue 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.

IFRS 8 introduces the term Chief Operating Decision Maker (CODM). The Executive Board comprising the Executive Directors  (Russell Taylor (Chief Executive Officer), Neil Jones (Financial Director), Edward Strachan (Executive Director)), Stephen Keen, Alexander Shtalenkov, Michael Johannes, Colette Tebbutt and Suzanne King is considered to be the CODM.

ITE's reportable segments are strategic business units that are based in different geographic locations, predominantly in the developing and emerging markets.  Each business unit is managed separately and has a different marketing strategy as determined by the local management. The products and services offered by each business unit are identical across the group.  

Each reportable segment derives its revenue through the organization of exhibitions and conferences.  The principal business at each unit is organization of B2B trade exhibitions, which accounts for over 95% of the Group's revenue. Consumer exhibitions account for 1% of ITE's revenue, conferences circa 3% and other activities relating to the core exhibition business (mostly publishing) account for 1% of revenue.  As an exhibition organizer, each business unit is responsible for hiring venues at which it stages its events and for marketing the events to both the exhibitors and visitors.

ITE Group evaluates performance on the basis of profit or loss from operations before tax expense not including non-recurring gains and losses and foreign exchange gains and losses.



 

Six months ended 31 March 2010

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







Revenue

4,047

9,588

16,730

7,763

1,096

39,225








Result

(5,814)

4,292

3,405

2,200

(76)

4,007


________

________

______

________

______

______

By origin of sale







Revenue

17,765

3,853

9,940

6,496

1,170

39,225








Result

2,767

1,190

(1,066)

740

376

4,007


_______

______

______

_______

______


Share of results of associates






126







______

Operating profit







Gain on disposal of associate






834

Finance income






864

Finance costs






(245)







_______

Profit before tax






5,586

Tax






(1,452)







_______

Profit after tax






4,134







________

Capital expenditure

200

52

168

84

2

506

Depreciation and amortisation

1,632

53

1,490

328

3

2,506








Balance Sheet







Assets *

70,650

8,462

59,316

7,624

3,532

149,584


_______

_______

_______

_______

_______


Investment in associates






-







_______

Consolidated total assets






149,584







________

Liabilities *

44,803

4,340

32,850

3,767

2,853

88,644


________

________

________

________

________

_______

* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities

The revenue in the period of £39.2 million includes £0.2 million of barter sales.



 

Six months ended 31 March 2009

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







Revenue

3,703

10,561

20,620

8,200

146

43,230








Result

(5,502)

4,222

9,787

3,022

(54)

11,475


________

______

______

________

______

______

By origin of sale







Revenue

21,742

4,767

11,991

4,730

-

43,230








Result

878

1,096

8,473

1,165

(137)

11,475


_______

______

______

_______

______


Share of results of associates






638







_______

Operating profit






12,113

Finance income






438

Finance costs






(1,407)







_______

Profit before tax






11,144

Tax






(3,120)







_______

Profit after tax






8,024







______

Capital expenditure

262

39

28

17

-

346

Depreciation and amortisation

975

15

1,249

304

-

2,543








Balance Sheet







Assets *

67,351

6,912

45,510

6,619

4

126,396


_______

______

______

_______

______


Investment in associates






1,793







_______

Consolidated total assets






128,189







________

Liabilities *

54,074

4,788

29,542

4,604

153

93,161


________

______

______

________

______

______








 

* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities

The revenue in the period of £43.2 million includes £0.1 million of barter sales.



 

Year ended 30 September 2009
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







Revenue

7,016

19,031

80,863

9,585

235

116,730








Result

(6,188)

6,451

39,731

3,473

(1,189)

42,278


________

______

______

________

______

______

By origin of sale







Revenue

57,002

9,092

44,833

5,803

-

116,730








Result

16,752

2,570

22,445

669

(158)

42,278


_______

______

______

_______

______


Share of results of associates






663







______

Operating profit






42,941

Finance income






619

Finance costs






(2,108)







_______

Profit before tax






41,452

Tax






(10,790)







_______

Profit after tax






30,662







______

Capital expenditure

223

28

163

35

-

449

Depreciation and amortisation

1,868

6

2,432

756

-

5,062








Balance Sheet







Assets**

74,081

7,941

46,912

1,875

-

130,809


________

______

______

________

______


Investment in associates






1,840







_______

Consolidated total assets






132,649







______

Liabilities**

46,116

3,914

19,490

1,939

196

71,655


________

______

______

________

______

______

 

 







**  Segment assets and segment liabilities exclude current and deferred tax assets and liabilities.

The revenue in the year of £116.7 million includes £0.5 million of barter sales.

3.         Investment revenue


Unaudited

Unaudited

Audited


£000

£000

£000





Interest receivable from bank deposits

131

420

619

Interest receivable on advances to venues

-

15

-

Unwind of fair value discount on venue advances

-

3

-

Gain on derivative financial instruments

100

-

-

Gain on revaluation of Primexpo North West LLC put option

633

-

-


__________

__________

__________


864

438

619


__________

__________

__________





4.  Finance costs


Six months to 31 March 2010

  Six months to 31 March 2009

Year ended 30 September 2009


Unaudited

Unaudited

Audited


£000

£000

£000





Interest on bank loans and overdrafts

108

99

148

Bank charges

131

117

264

Loss on derivative financial instruments

6

1,191

1,696


__________

__________

__________


245

1,407

2,108


__________

__________

__________

 

 

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

 



Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009


Unaudited

Unaudited

Audited






£000

£000

£000





Profit on ordinary activities before taxation

5,586

11,144

41,452

Amortisation of acquired intangibles

2,080

2,108

4,311

Gain on revaluation of Primexpo North West LLC put option

 

(633)

 

-

 

-

Gain on disposal of associate

(834)

-

-

Transaction costs

243

-

-


__________

__________

__________

Headline pre-tax profit

6,442

13,252

45,763


__________

__________

__________

 



6.         Taxation


Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009


Unaudited

Unaudited

Audited






£000

£000

£000

Current tax




     UK corporation tax

2,019

514

4,918

     Foreign tax

108

2,621

5,821


__________

__________

__________


2,127

3,135

10,739

Deferred tax

(675)

(15)

51


__________

__________

__________

Tax on profit on ordinary activities

1,452

3,120

10,790


__________

__________

 

__________

Tax rate at the interim is charged at 26% (2009: 28%) representing the best estimate of the weighted average annual corporation tax expected for the financial year.

 

7.  Dividends


Six months to 31 March 2010

Six months to 31 March 2009

Year ended 30 September 2009


Unaudited

Unaudited

Audited


£000

£000

£000

Final dividend for the year ended 30 September 2009

of 3.9p (2008: 3.7p) per ordinary share

 

9,238

 

8,809

 

8,809


__________

__________

__________


-



Interim dividend for the year ended 30 September 2009 of 1.6p per ordinary share

-

-

3,791

 





Proposed interim dividend for the year ending 30 September 2010 of 1.7p (2009: 1.6p)  per ordinary share

 

4,051

 

3,791

 

-


__________

__________

__________


The proposed interim dividend was approved by the Board on 13 May 2010 and has not been included as a liability as at 31 March 2010.



8.         Earnings per share

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

 


Headline diluted

Basic and diluted









Six months

to 31 March

2010

Unaudited

Six months

to 31 March

2009

Unaudited

Year ended 30 September

2009

Audited

Six months

to 31 March

2010

Unaudited

Six months

to 31 March

2009

Unaudited

Year ended 30 September

2009

Audited








£000

£000

£000

£000

£000

£000







Profit for the financial period attributable to equity holders of the parent

 

 

 

4,104

 

 

 

8,083

 

 

 

30,435

 

 

 

4,104

 

 

 

8,083

 

 

 

30,435

Amortisation of acquired intangibles

 

2,080

 

2,108

 

4,311

 

-

 

-

 

-

Tax effect of amortisation

 

(501)

 

(544)

 

(848)

 

-

 

-

 

-

Transactional  costs

243

-

-

-

-

-

Gain on revaluation of Primexpo North West LLC put option

(633)

-

-

-

-

-

Gain on disposal of associate

(834)

-

-

-

-

-

Tax effect of other adjustments

318

-

-

-

-

-


________

________

________

______

______

________


4,777

9,647

33,898

4,104

8,083

30,435


________

________

________

________

________

________

 

 



 

 

 

Six months to

31 March 2010

Six months to

31 March 2009

Year ended

30 September 2009


Number of shares ('000)

Number of shares ('000)

Number of shares ('000)

Weighted average number of shares:




For basic earnings per share

 

237,825

 

239,023

 

238,030

Dilutive effect of exercise of share options

 

1,988

 

1,172

 

1,352

For diluted earnings per share

 

239,813

 

240,195

 

239,382



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 attributable to equity holders of the parent for the financial year before amortization of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions and disposals.

 

9. Acquisition of business

On 27 November 2009 the Group purchased 70% of Airgate Holdings Limited, a Cypriot company, which in turn owns 100% of the shares in Expomedia Events India Private Limited and Tafcon ExpoMedia India Private Limited and 50% of the shares of Tafcon Expomedia International Private Limited.

A cash consideration of €2.2 million (£2.0 million) was paid on the 27 November 2009. A further amount of €0.3 million in deferred consideration was paid in April 2010.   

The acquisition of these companies is consistent with ITE's strategy of expanding its business model into new geographies.

In addition a put option has been recognised - see note 11 for further details.

Details of the aggregate net assets acquired as adjusted from book to fair value, and the attributable goodwill are presented as follows:



 

9.         Acquisition of business (continued)

 


Airgate Holdings Limited

Consolidated

Results

 

Net assets acquired 

£'000

Fixed assets

Intangible fixed assets

6

2,242

Cash

387

Trade and other receivables

629

Trade and other payables

(1,397)

Provisions

(76)

Deferred tax liability

(489)

Non-controlling interest

(49)


__________

Net assets acquired

1,253

Goodwill arising on acquisition

998


__________

Total cost of acquisition

2,251


__________

 

Satisfied by:

Net cash paid

 

 

2,014

Deferred consideration

237


__________


2,251


__________

 

 

Net cash outflow arising on acquisition:

Net cash paid

 

 

 

2,014

Cash and cash equivalents acquired

(387)


__________


1,626


__________

 

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at balance sheet date. If necessary adjustments will be made to these carrying values and the related goodwill, within 12 months of the acquisition date. Goodwill arising on acquisition (£1.0m) represents the perceived value placed by the Group of having an established operating position in a new emerging market.

Details of net assets acquired on 27 November 2009 and the related fair value adjustments are presented as follows:

 

Assets acquired

 

Book value
£000

Adjustments
£000

Fair value
£000

Fixed assets

6

-

6

Intangible fixed assets

613

1,629

2,242

Cash

387

-

387

Trade and other receivables

629

-

629

Trade and other payables

(1,397)

-

(1,397)

Provisions

(76)

-

(76)

Deferred tax liability

-

(489)

(489)

Non controlling interest

-

(49)

(49)


_________

___________

___________

Net assets acquired

162

1,091

1,253


________

___________

___________

 

The acquired business has contributed £1.2 million to Group revenue and £0.3 million to profit before tax.  If the acquisition had occurred on 1 October 2009 there would have been no material difference to these results.

Acquisition of exhibitions in Turkey

On 31 December 2009, ITE has completed its exit from ITF, it's 50% associate venture in Turkey by  acquiring half of the associates events for its own portfolio and selling its shareholding in the associate to its former joint shareholder.

The following exhibitions were acquired;

IMOB , an International furniture exhibition, held annually in Istanbul

Promoturk ,an exhibition for corporate gifts, stationery and the giftware market held annually in Istanbul  

Ipack, a specialised exhibition for packaging and food processing systems held annually in Istanbul

Gida, an International food products and processing technologies exhibition held annually in Istanbul

Time, a manufacturing technologies exhibition, held in Istanbul

Tatef, an International metalworking technologies exhibition held every two years in Istanbul

 

The assets acquired are set out in the table below:

 

Intangible fixed assets

£'000

2,583

Sundry debtors

158

Loans and advances

1,083

Current liabilities

(1,241)


__________

Net Assets acquired

2,583


__________

 

The fair value of the assets acquired is £2.6m and consideration for these was the 50% shareholding the Group held in ITF. This shareholding was previously held on the Group's books at a value of £1.2m and as such gives rise to a gain on disposal of £1.4m. After deducting the respective deferred tax liability, a gain on disposal of £0.8m was recognised; this is shown on the face of the income statement.  

No cash was transferred as part of the transaction.

10.        Bank overdraft

The bank overdraft is repayable on demand. The borrowings are denominated in both Euros and 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 Euros and US Dollars.

11.        Derivative financial instruments


Six months to 31 March 2010

Unaudited

Six months to

31 March 2009

Unaudited

Year ended

30 September 2009 Audited


£000

£000

£000

Current assets




Foreign currency forward contracts

663

-

226


___________

___________

___________


663

-

226


___________

___________

___________

Non-current assets




Foreign currency forward contracts

229

-

68


___________

___________

___________


229

-

68


___________

___________

___________

 

 


Six months to 31 March 2010

Unaudited

Six months to

31 March 2009

Unaudited

Year ended

30 September 2009 Audited


£000

£000

£000

Current liabilities




Foreign currency forward contracts

61

3,938

-

Put options

3,036

3,822

5,020


___________

___________

___________


3,097

7,760

5,020


___________

___________

___________

Non-current liabilities




Foreign currency forward contracts

681

265

857

Put options

3,313

1,354

-


___________

___________

___________


3,994

1,619

857


___________

___________

___________

 



Foreign currency derivatives

The Group utilises foreign currency forward contracts to hedge future euro denominated sales made from the UK.  The Group is party to foreign currency forward 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 contracts, the Group has an obligation to sell Euros for Sterling at specified rates at specified dates. 

As at 31 March 2010 the notional amounts of outstanding foreign currency forward contracts that the Group has committed to are as follows:

Derivative assets


Six months to 31 March 2010

Unaudited

Six months to

31 March 2009

Unaudited

Year ended

30 September 2009 Audited


€000

€000

€000





Foreign currency forward contracts

33,300

-

45,900


___________

___________

___________


33,300

-

45,900


___________

___________

___________

 

Derivative liabilities


Six months to 31 March 2010

Unaudited

Six months to

31 March 2009

Unaudited

Year ended

30 September 2009 Audited


€000

€000

€000





Foreign currency forward contracts

29,900

72,700

18,600


___________

___________

___________


29,900

72,700

18,600


___________

___________

___________

 

The arrangements as at 31 March 2010 cover exchange exposures over the next 33 months, with €36.1 million covering exposures after September 2010.   These instruments have been designated in effective hedging relationships, with any changes in their fair value being recorded in equity.

At 31 March 2010, the fair value of these derivatives is estimated to be an asset of approximately £0.2 million (31 March 2009: liability of £4.2 million on forward contracts; 30 September 2009: liability of £0.6 million on forward contracts). This is based on market valuations.  This amount has been deferred in equity at 31 March 2010.

Put options

The Group is party to a number of put options to acquire the non-controlling interests arising from business combinations. These instruments are initially recognised at fair value on the balance sheet with all subsequent changes in fair value taken to the income statement.



 


Six months to 31 March 2010

Unaudited

Six months to

31 March 2009

Unaudited

Year ended

30 September 2009 Audited


£000

£000

£000





Put option for Primexpo North West LLC

3,036

3,822

3,806

Put option for Newex Marketing Limited

1,283

1,354

1,214

Put option for Airgate Holdings Limited

2,030

-

-


___________

___________

___________


6,349

5,176

5,020


___________

___________

___________





 

 




12.        Share capital


Six months to 31 March 2010 Unaudited

Six months to 31 March 2009 Unaudited

Year ended 30 September 2009

Audited


£000

£000

£000

Authorised




375,000,000 ordinary shares of 1 penny each

(31 March 2009: 375,000,000)             

3,750

3,750

3,750


__________

__________

__________

Allotted and fully-paid




248,289,702  ordinary shares of 1 penny each

(31 March 2009: 248,107,702)

2,483

2,481

2,481


__________

__________

__________


During the period, the Company allotted 182,000 (2009: 199,800) ordinary shares of 1 penny each pursuant to the exercise of share options. The total consideration for the shares issued was £154,873 (2009: £11,500).

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

13.        Events after the balance sheet date

On 1st April 2010, the Group completed the purchase of the remaining 25% of Primexpo, the organiser of Interstroyexpo (the leading St. Petersburg construction event), for  €3.4m paid in cash.

On 9th April 2010, the Group completed the purchase of the exhibition assets of Global Expo, a Russian exhibition company based in Moscow, which organises the annual Moscow events Meat and Diary expo and CityBuild. The Group paid an initial consideration of £1.1m, with a further payment of a circa £1m due next March dependent on the performance of the next editions of these events.

On 29th April 2010, the Group paid net €13m cash for Fin-mark Srl, an Italian company which organises the Aqua-therm exhibitions (heating, ventilation and air-conditioning) in Ukraine, Kazakhstan and Azerbaijan. At completion the company had gross assets of circa €2.5m.

Due to the proximity to the date of signing this Interim Management Statement, the IFRS 3 acquisition accounting has not been finalised and the associated IFRS 3 disclosures are therefore to be completed.  

14.        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 with key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2010. There have been no material changes in related party transactions.

Transactions between the Group and its associates, where relevant, are disclosed below.

Trading transactions

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 £9,000 (31 March 2009: £41,366; 30 September 2009: £44,000). 

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 £104,000 (31 March 2009: £98,100; 30 September 2009: £196,000). 

During the period ended 31 March 2010 consultancy fees of £120,000 (31 March 2009: £120,000; 30 September 2009: £328,000) were paid to Kyzyl Tan Consultants Limited ("Kyzyl Tan"), of which Edward Strachan is a significant shareholder.



15.        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.  The principal risks and uncertainties are detailed below and in our most recent annual report.

Economic instability reduces demand for exhibition space

Reduced demand for exhibition space would reduce the profits of exhibitions. ITE operates across a wide range of sectors and countries to minimise the exposure to any single market and ITE is constantly looking at opportunities to diversify further.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Interim Management Report. The financial position of the Group, its cash flows and liquidity position are described in the financial statements and notes. The Group has considerable financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.

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, and the diversity of businesses across sectors and geography provides protection for the longer-term prospects of the Group.

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 which protects profits against such an event 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.  In all of its overseas markets, ITE has a strong position as an international organiser, achieved through effective use of its international sales network and its established brands for major events.  A single exhibition or sector in a market could have its prospects curtailed by a strong competitor launch; however, the breadth of ITE's portfolio of events, with its geographic and sector diversity, reduce the risk of a competitive threat to the Group's overall business.

 

 

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. ITE has a good record of retaining its key staff.

 

Financial risk

The key financial risk to the Group is the movement in foreign currency exchange rates.  The Group is exposed to movements in foreign currency exchange rates against Sterling for both trading transactions and for the translation of overseas operations. The principal exposures are to the Sterling/Euro exchange rate, which forms the basis of invoicing for most sales transactions within the Group. It is also exposed to the Ruble/Euro and Ruble/Sterling exchange rates in relation to the retranslation of foreign denominated assets (principally debtors and cash) within Ruble denominated companies. The Group seeks to minimise exposure by limiting balances in soft currency deposits and securing forward contracts against its future sales.



 

Responsibility statement

 

We confirm that to the best of our knowledge:

 

(a)  the condensed set of interim 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

 

 

 

 

 

 

Chief Executive Officer

 

Russell Taylor

 

17 May 2010



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 2010 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, , the consolidated statement of changes in equity, the condensed consolidated balance sheet the consolidated cash flow statement and related notes 1 to 15. 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 (UK and Ireland) 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 Kingdom's 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 2010 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 LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

14 May 2010

 


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