Information  X 
Enter a valid email address

ITE Group PLC (ITE)

  Print      Mail a friend       Annual reports

Monday 21 May, 2012

ITE Group PLC

Interim Results

RNS Number : 7090D
ITE Group PLC
21 May 2012
 



21 May 2012

 

 

ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT

Acquisitions lead growth

 


Six months to

31 March 2012

Six months to

31 March 2011




Volume sales 

367,900 m2

282,600 m2




Revenue

£68.6m

£53.0m




Pre-tax profit

£6.3m

£3.5m




Headline pre-tax profit*

£13.1m

£9.1m




Diluted earnings per share

2.1p

1.1p




Headline diluted earnings per share**

4.3p

3.0p




Interim dividend per share

2.1p

1.9p




Net cash

£16.4m

£15.6m

 

·        First half revenues and profits increased by 29%+

·        Like-for-like revenue growth of 9% over the first six months

·        Two acquisitions completed in Ukraine - expanding sector coverage

·        Small bolt-on acquisition in India to expand the portfolio

·        Net cash as at 31st March of £16.4m

·        Interim dividend increased to 2.1p (2011: 1.9p)

·        £156.2m of revenue booked for the full year - (£137.1m this time last year)

 

 

Russell Taylor, CEO of ITE Group plc, commented:

 

"ITE has delivered a good performance over the first half of the year, with solid organic growth supplemented by the contribution of new businesses acquired last year. The acquisitions of Autoexpo and the Beauty portfolios in Ukraine have expanded sector coverage in a market with potential for growth. The Group has also grown its portfolio of events in India through a small bolt-on acquisition in Chennai.

 The Group has a strong balance sheet and its markets are trading well. As at 18 May 2012 the Group has booked revenues for the current financial year of £156.2m (2011: £137.1m), which includes sales from newly acquired businesses as well as organic growth. On a like-for-like basis revenues booked for the full year are more than 6% ahead of this time last year. The Group is in a strong financial position with net cash of £10.2m at 16 May 2012, and with continued good trading conditions in our markets the Board has confidence in ITE's future prospects". 

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

**  Headline diluted earnings per share is calculated using profit before amortisation of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options, imputed interest charges on put option liabilities and direct costs on completed and pending acquisitions & disposals - see note 8 to the consolidated financial statements for details.

 

Enquiries:

 

Russell Taylor, Chief Executive

Neil Jones, Group Finance Director

 

ITE Group plc

020 7596 5000

Charles Palmer/Emma Appleton

FTI Consulting

020 7831 3113

 

 

Financial performance

 

ITE has delivered a strong set of results for the first six months of the year through growth in its core markets together with a first-time contribution from last year's newly acquired businesses. Revenues for the first six months increased by 29% to £68.6m (2011: £53.0m) and headline profits before tax  increased by over 40% to £13.1m (2011: £9.1m).

 

During 2011, the Group made a number of acquisitions and these were a significant factor in the growth of the first half's results. The first time contribution to revenue from the MVK, Krasnodar and Turkeybuild portfolios was £11.6m, and the incremental headline profit before tax from these businesses over this period was £3.0m. The Group's core exhibition portfolio delivered organic growth of 9% in revenues and gross profits over the first six months.

 

Reported profits before tax were £6.3m (2011: £3.5m). Fully diluted earnings per share for the first six months were 2.1p (2011: 1.1p) and headline diluted earnings per share for the first six months were 4.3p (2011: 3.0p). Cash generated from operations over the first six months was £37.0m (2011: £37.3m) of which £4.9m has been applied to acquisitions and £5.9m in further loans to venues. After paying for the first of the two Ukrainian acquisitions the Group had net cash balances of £16.4m (2011: £15.6m) at 31 March 2012.

 

Business development

 

Since 1 October 2011, the Group has continued to expand its sector exposure in Ukraine, with two bolt-on acquisitions. On 28 November 2011 the Group announced the acquisition of the Autoexpo portfolio of events, the largest of which, Autoexpo is the principal automotive event in the Ukrainian market which takes place in May each year.  On 12 April 2012, the Group announced the acquisition of Beautex which runs two beauty events in Ukraine in April and September of each year.

 

On 10 May 2012, the Group completed a small acquisition in India, acquiring two construction events run from Chennai. This new business provides the Group with a new regional base of operation as well as adding additional critical mass to the Group's Indian business.

 

The Group continues to seek opportunities which are consistent with its overall strategy of building market leading positions in high growth markets.

 

Board and management

 

On 1 February Marco Sodi was appointed to the Board as a Non-executive director and Chairman designate. On 23 March Iain Paterson who had been Chairman of ITE Group plc since March 2002 stepped down from the Board as Chairman. Marco Sodi took over as Non-executive Chairman from the same date. The Board warmly thank Iain for his significant contribution to the development of ITE Group plc over the last ten years.

 

Dividend

 

The Board has approved an interim dividend of 2.1p per share (2011: 1.9p per share) maintaining the Group's progressive dividend policy.

 

Trading highlights and review of operations

 

Over the first half of the financial year the Group experienced good trading conditions in most of its markets. Total volume sales for the first six months increased by 30% to 367,900sqm (2011: 282,600sqm) through a mix of organic growth and acquired businesses. On a like-for-like basis volume sales were 12% higher, and revenues 9% higher than for the same period last year. Since 1 October 2011, ITE has organised 125 events (2011: 93 events), the increase in events mostly relating to the new businesses acquired in Moscow, Krasnodar and Turkey. A summary of the Group's exhibition business sales and margins for the first six months of the year is set out below.

 


Square meters sold

000's

Revenue*

£'m

Gross Profit*

£'m

First half 2011

283

52.4

20.4

Non-annual 2011

(36)

(2.4)

(0.4)

Annually recurring

247

50.0

20.0

Acquisitions

79

11.6

4.3

Net organic change

29

4.7

1.8

Non-annual 2012

13

1.7

0.6

First half 2012

368

68.0

26.7

 

* Excluding publishing activity

 

 

Russia

 

Volume sales in Russia over the first six months of the year were nearly double last year's comparable performance through the addition of the newly acquired portfolios. On a like-for-like basis, volume sales were 14% higher than the same period last year.

 

Moscow performed well over the first half of the financial year. The autumn events portfolio was increased significantly by the Group's acquisition of several new events in the MVK portfolio. The largest of these events were the printing exhibition, Polygraphinter, and the woodworking machinery event, Woodex, both of which are biennial and both of which out-performed initial expectations. In the core Moscow portfolio, Aqua-therm Moscow again delivered strong growth. This result helped to offset a small decline in the Moscow International Travel & Tourism event which delivered sales of 20,000sqm (2011: 21,000sqm), reflecting the previously highlighted difficult trading environment for industry this year. Overall, like-for-like volume sales in Moscow for the first six months were 2% more than this time last year.

 

The St. Petersburg office delivered a like-for-like volume sales increase of 5% over the first six months, although most of the office's large events take place in the second half of the year.

 

The Group's Novosibirsk office (Siberia) saw strong growth in both volumes and revenues following the opening of the new venue facility where ITE is the anchor tenant. This international quality facility is expected to provide the base for an expansion of ITE's business in the coming years.  Sales volumes increased by 16% and revenues by over 30%, although increased operational and initial set-up costs associated with the new facility affected profits during the period.

 

In Krasnodar, the Group benefited from the first time contribution of the Autumn portfolio of events following the Group's acquisition of this business in March 2011. Overall, the business performed well, trading ahead of initial expectations. The largest event to have taken place over the first six months was the leading Russian agricultural event, Yugagro.

 

 

Central Asia & the Caucasus

 

Volume sales for the first six months in Central Asia and the Caucasus were 5% higher on a like-for-like basis than last year.

 

The Kazakhstan business reported a 10% increase in volume sales across its events taking place in the first half. The largest event in the region is the Kazakhstan International Oil & Gas Exhibition (KIOGE), which took place in Almaty in October. The event has been expanded this year to include the Kazenergy conference in Astana and this allowed the Group to co-ordinate the development of a broader Kazakhstan Oil and Gas Week. The combined event produced volume sales of 8,500sqm an increase of 9% on the previous year and combined conference revenues were increased by over 30%.

 

In Azerbaijan the good trading environment has continued and the Group's business here continues to grow into the larger venue facilities realising good volume increases at most events.

 

Eastern & Southern Europe

 

In Turkey the Group made good progress with volume sales increasing on a like-for-like basis. Actual sales for the first six months were less than last year's as the biennial event, TATEF (industrial metal working), did not take place in this period. The Group's leading regional travel event EMITT, achieved record volumes and revenues, illustrating the continued strength of this sector in the region. Turkeybuild, the pre-eminent construction event in Turkey, took place in early May for the first time under the Group's ownership and delivered its largest ever event at 38,700sqm, an 11% increase in volume sales over the previous event.

 

Ukraine's business made good progress in its international food event, and delivered increased visitor numbers at all of its events which will help stimulate future demand.

 

Rest of the World

 

MODA, the Group's leading UK mid-market fashion exhibition delivered an increase in revenue on marginally smaller volumes despite difficult trading conditions in the UK fashion industry. The MODA Group has continued its strategy of developing niche industry sectors through SCOOP, a high-end designer womenswear exhibition in London which delivered strong growth in its first edition under MODA's management.

 

In India, the Group's leading event Paperex, which serves the domestic paper mill industry, grew by nearly 30% over its 2010 edition, demonstrating the growth potential within the region. The Group is focusing on developing its existing brands in its core sectors and adding more events such as those in Chennai to give the operation some additional capacity.

 

April trading

 

April is the largest trading month for the Group. Total revenues for April were marginally ahead of last year's, but slightly below on a like-for-like basis. This result reflects the effect of competitive launches against two of our April events, Mosbuild and the recently acquired furniture event, Euroexpomebel, as well as some strong performances from the Group's other leading events. As expected Mosbuild proved very resilient to competition and performed well in delivering 66,000sqm, a decline of less than 4,000sqm (after adjusting for the biennial pattern in the Windows sector). Euroexpomebel, a less established event, proved more price sensitive and volume sales suffered accordingly. Other events in the April portfolio performed strongly, with Transrussia (logistics) and Moscow International Protection and Security both delivering volume growth of 16% over last year's events

 

 

 

Set out below are the results for the Group's principal events taking place in April 2012:

 


2011

sqm.

 

Mosbuild

59,300

62,800

Windows sector

6,700

14,800

Mosbuild Total

66,000

77,600

EuroExpomebel

5,600

14,200

TransRussia

10,100

8,700

Moscow International Protection & Security

10,000

8,600

 

 

Outlook

As at 18 May 2012, the Group had booked revenues for the current financial year of £156.2m (2011: £137.1m) which on a like-for-like basis represent an increase of more than 6% over the comparable figure for last year.

 

The Group is in a strong financial position and continues to generate high levels of cash. With continued good trading conditions in its markets the Board has confidence in ITE's future prospects. 

 

Going Concern

As stated in note 19 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 2012

 



Six months to 31 March 2012


Six months to 31 March 2011


Year ended 30 September 2011



Unaudited


Unaudited


Audited









Notes

£000


£000


£000

Continuing operations







Revenue


68,609


53,042


155,456

Cost of sales


(41,804)


(32,440)


(80,595)



__________


__________


__________

Gross profit


26,805


20,602


74,861

Other operating income


176


147


292

     Administrative expenses before amortisation


(13,653)


(11,930)


(24,099)

     Amortisation of acquired intangibles

11

(6,146)


(4,801)


(10,717)

     Impairment loss


-


-


(130)

     Foreign exchange loss on operating activities


(616)


(310)


(208)

Total administrative expenses


(20,415)


(17,041)


(35,154)

Share of results of associate


57


-


-



__________


__________


__________

Operating profit


6,623


3,708


39,999

Investment revenue

3

590


193


582

Finance costs

4

(882)


(384)


(1,487)



__________


__________


__________

Profit on ordinary activities before taxation

5

6,331


3,517


39,094

Tax on profit on ordinary activities

6

(1,362)


(717)


(8,292)



__________


__________


__________

Profit for the period


4,969


2,800


30,802



__________


__________


__________

Attributable to:







      Owners of the Company


5,099


2,680


30,724

      Non-controlling interests


(130)


120


78



__________


__________


__________



4,969


2,800


30,802



__________


__________


__________








Earnings per share (p)







Basic

8

2.1


1.1


12.8

Diluted

8

2.1


1.1


12.6



__________


__________


__________

 

 



Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2012

 

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



Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011



Unaudited

Unaudited

Audited








£000

£000

£000






Profit for the period attributable to shareholders


4,969

2,800

30,802

Cash flow hedges:









    Movement in fair value of cash flow hedges


2,737

(2,248)

(662)

    Fair value of cash flow hedges released to the income statement


(122)

(773)

(1,367)

Currency translation movement on net investment in subsidiary undertakings


2,109

2,110

(4,162)



__________

   _________

__________



9,693

1,889

24,611



__________

__________

__________






Tax relating to components of comprehensive income


(654)

800

551

 

Total comprehensive income for the period


9,039

2,689

25,162

Attributable to:





     Owners of the Company


9,169

2,569

25,084

     Non-controlling interests


(130)

120

78



9,039

2,689

25,162



__________

__________

__________

 

The Consolidated Statement of Comprehensive Income for the six months to 31 March 2011 has been restated to remove the line 'Put option at fair value' which was included in error, the amount has now been taken directly to retained earnings. The total comprehensive income for the period of £2,689,000 is £754,000 higher as a result and there is no change in the net assets of the Group as at 31 March 2011.

 

 

 


Condensed Consolidated Statement of Changes in Equity
31 March 2012

 

 

Six month period ended 31 March 2012:










 

 

 

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 2011

2,486

2,724

2,746

457

(7,826)

87,057

(13,345)

148

(594)

73,853

7,059

80,912














Net profit for the period

-

-

-

-

-

5,099

-

-

-

5,099

(130)

4,969

Currency translation movement on net investment in subsidiary undertakings

-

-

-

-

-

-

-

2,109

-

2,109

-

2,109

Movement in fair value of cash flow hedges

-

-

-

-

-

-

-

-

2,737

2,737

-

2,737

Fair value of cash flow hedges released to the income statement

-

-

-

-

-

-

-

-

(122)

(122)

-

(122)

Tax relating to components of comprehensive income






(654)

-

-

-

(654)

-

(654)

Total comprehensive income for the 6 month period ending 31 March 2012

-

-

-

-

-

4,445

-

2,109

2,615

9,169

(130)

9,039














Exercise of options

2

39

-

-

1,430

(1,468)

-

-

-

3

-

3

Dividends paid

-

-

-

-

-

(10,109)

-

-

-

(10,109)

-

(10,109)

Dividends paid to NCI

-

-

-

-

-

-

-

-

-

-

(937)

(937)

Share-based payments

-

-

-

-

-

1,041

-

-

-

1,041

-

1,041

Tax credited to equity

-

-

-

-

-

180

-

-

-

180

-

180

Foreign currency impact on put option reserve

-

-

-

-

-

-

(194)

 

194

-

-

-

-


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2012

2,488

2,763

2,746

457

(6,396)

81,146

(13,539)

2,451

2,021

74,137

5,992

80,129


 

 

 

 

 

 

 

 

 

 

 

 

 

Six month period ended 31 March 2011: 

 


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 2010

2,483

2,698

2,746

457

(9,638)

68,318

(1,351)

4,310

1,435

71,458

1,123

72,581














Net profit for the period

-

-

-

-

-

2,680

-

-

-

2,680

120

2,800

Currency translation movement on net investment in subsidiary undertakings

-

-

-

-

-

-

-

2,110

-

2,110

-

2,110

Movement in fair value of cash flow hedges

-

-

-

-

-

-

-

-

(2,248)

(2,248)

-

(2,248)

Fair value of cash flow hedges released to income statement

-

-

-

-

-

-

-

-

(773)

(773)

-

(773)

Tax relating to components of comprehensive income

-

-

-

-

-

800

-

-

-

800

-

800














Total comprehensive income for the 6 month period ending 31 March 2011

-

-

-

-

-

3,480

-

2,110

(3,021)

2,569

120

2,689

Put option on acquisition of subsidiary

-

-

-

-

-

-

(1,082)

-

-

(1,082)

-

(1,082)

Issue of share capital

3

-

-

-

-

-

-

-

-

3

-

3

Dividends paid

-

-

-

-

-

(9,537)

-

-

-

(9,537)

-

(9,537)

Exercise of options

-

-

-

-

1,664

(148)

-

-

-

1,516

-

1,516

Share-based payments

-

36

-

-

-

879

-

-

-

915

-

915

Tax credited to equity

-

-

-

-

-

328

-

-

-

328

-

328















 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2011

2,486

2,734

2,746

457

(7,974)

63,320

(2,433)

6,420

(1,586)

66,170

1,243

67,413


 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2011:                                                                                                      


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 2010

2,483

2,698

2,746

457

(9,638)

68,318

(1,351)

4,310

1,435

71,458

1,123

72,581














Net profit for the year

-

-

-

-

-

30,724

-

-

-

30,724

78

30,802

Currency translation movement on net investment in

subsidiary undertakings

-

-

-

-

-

-

-

(4,162)

-

(4,162)

-

(4,162)

Movement  in fair value of cash flow hedges

-

-

-

-

-

-

-

-

(662)

(662)

-

(662)

Fair value of cash flow hedges released to the income statement









(1,367)

(1,367)


(1,367)

Tax relating to components of comprehensive income

-

-

-

-

-

551

-

-

-

551

-

551














Total comprehensive income for the year ending 30 September 2011

-

-

-

-

-

31,275

-

(4,162)

(2,029)

25,084

78

25,162

Put option on acquisitions







(12,856)



(12,856)

6,554

(6,302)

Dividends paid

-

-

-

-

-

(14,105)

-

-

-

(14,105)

-

(14,105)

Exercise of options

3

26

-

-

1,812

(106)

-

-

-

1,735

-

1,735

Share-based payments

-

-

-

-

-

1,696

-

-

-

1,696

-

1,696

Tax charged to equity

-

-

-

-

-

132

-

-

-

132

-

132

Exercise of put option on acquisition of subsidiary

-

-

-

-

-

(153)

862

-

-

709

(696)

13















 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 30 September 2011

2,486

2,724

2,746

457

(7,826)

87,057

(13,345)

148

(594)

73,853

7,059

80,912


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Condensed Consolidated Statement of Financial Position

31 March 2012

 



31 March 2012

31 March 2011

30 September 2011


 

 

Unaudited

Unaudited

Audited 


Notes

£000

£000

£000

Non-current assets





Goodwill

10

73,691

72,174

70,684

Other intangible assets

11

57,923

50,835

58,867

Investments


400

-

400

Property, plant & equipment


2,264

2,039

2,080

Interests in associates


157

-

100

Venue advances and other loans


3,477

5,104

4,043

Derivative financial instruments

15

838

-

79

Deferred tax asset


2,033

2,560

2,112



___________

___________

___________



140,783

132,712

138,365

Current assets





Trade and other receivables

12

52,891

45,031

51,623

Tax prepayment


1,938

46

923

Derivative financial instruments

15

1,007

345

221

Cash and cash equivalents


38,257

42,972

33,961



___________

___________

___________



94,093

88,394

86,728






Total assets


234,876

221,106

225,093






Current liabilities





Bank loan and overdraft

14

(21,847)

(17,752)

(13,948)

Trade and other payables

13

(20,182)

(23,847)

(19,766)

Deferred income


(85,963)

(85,429)

(67,867)

Derivative financial instruments

15

(1,258)

(1,297)

(906)

Provisions


(1,095)

(517)

(565)



___________

___________

___________



(130,345)

(128,842)

(103,052)

Non-current liabilities





 

Bank loan

14

-

(9,633)

(14,483)

Provisions


(471)

(846)

(866)

Deferred tax liabilities


(12,343)

(10,896)

(13,067)

Derivative financial instruments

15

(11,588)

(3,476)

(12,713)



___________

___________

___________



(24,402)

(24,851)

(41,129)






Total liabilities


(154,747)

(153,693)

(144,181)



___________

___________

___________

Net assets


80,129

67,413

80,912



___________

___________

___________

 



 



31 March 2012

31 March 2011

30 September 2011



Unaudited

Unaudited

Audited

Equity





Share capital

16

2,488

2,486

2,486

Share premium account


2,763

2,734

2,724

Merger reserve


2,746

2,746

2,746

Capital redemption reserve


457

457

457

ESOT reserve


(6,396)

(7,974)

(7,826)

Retained earnings


81,146

63,320

87,057

Translation reserve


2,451

6,420

148

Hedge reserve


2,021

(1,586)

(594)

Put option reserve


(13,539)

(2,433)

(13,345)



___________

___________

___________

Equity attributable to equity holders of the parent


74,137

66,170

73,853

Non-controlling interest


5,992

1,243

7,059



___________

___________

___________

Total equity


80,129

67,413

80,912



___________

___________

___________

 

 

 


Condensed Consolidated Cash Flow Statement

For the six months ended 31 March 2012



Six months to 31 March 2012

Six months to 31 March 2011*

Year ended 30 September 2011



Unaudited

Unaudited

Audited



£000

£000

£000

Cash flows from operating activities





Operating profit from continuing operations


6,623

3,708

39,999

Adjustments for non-cash items:





Depreciation and amortisation


6,697

5,261

11,647

Impairment of goodwill


-

-

130

Share-based payments


1,041

879

1,696

Share of associate profit


(57)

-

-

Increase/(decrease) in provisions


135

(329)

172

Disposal of property, plant and equipment


-

-

35

Foreign exchange loss on operating activities


616

310

208

Barter sales


(300)

(200)

(501)

Operating cash flows before movements in working capital


14,755

9,629

53,386

Increase in receivables


1,140

4,587

(10,589)

Utilisation of venue advances and loans


4,265

3,730

7,330

Increase in deferred income


18,096

30,218

12,656

Increase/(decrease) in payables


(1,298)

(10,544)

3,364

Fair value of cash flow hedges released to the income statement


(122)

(773)

(1,367)

Cash received on settlement of forward contracts


202

409

546

Cash generated from operations


37,038

37,256

65,326

Tax paid


(4,200)

(2,783)

(11,589)

Venue advances and loans


(5,860)

(4,000)

(6,923)

Net cash from operating activities


26,978

30,473

46,814

Investing activities





Interest received


548

179

449

(Loss)/gain on derivative financial instruments


(10)

(18)

(18)

Acquisition of businesses - cash paid


(4,915)

(28,674)

(47,565)

Asset retained by vendor on acquisition of Krasnodar Expo


-

-

(2,010)

Cash acquired through acquisitions


-

158

3,032

Purchase of property, plant and equipment and computer software


(825)

(811)

(1,523)

Net cash utilised from investing activities


(5,202)

(29,166)

(47,635)

Financing activities





Cash paid to acquire non-controlling interests


-

-

(763)

Dividends paid


(10,109)

(9,537)

(14,105)

Dividends paid to non-controlling interests


(937)

-

-

Interest paid


(652)

(352)

(1,082)

Proceeds from the issue of share capital


2

3

3

Net cash flow in relation to ESOT shares


-

1,552

-

Net cash flows from financing activities


(11,696)

(8,334)

(15,947)

*  The Consolidated Cash Flow Statement as at 31 March 2011 has been restated to separate out the following captions; foreign exchange, barter sales, utilisation of venue loans and advances, fair value of cash flow hedges released to the income statement and cash received on settlement of forward contracts for greater clarity.

 

 

 



Six months to 31 March 2012

Six months to 31 March 2011*

Year ended 30 September 2011



Unaudited

Unaudited

Audited



£000

£000

£000

Net (decrease)/increase in cash and cash equivalents


10,080

(7,027)

(16,768)

Net cash and cash equivalents at beginning of period net of debt


5,530

22,980

22,980

Effect of foreign exchange rates


800

(366)

(682)

Net cash and cash equivalents at end of period net of debt


16,410

15,587

5,530

Comprising:





Cash and cash equivalents


38,257

42,972

33,961

Bank overdraft


(7,822)

(17,752)

(13,948)

Bank loan


(14,025)

(9,633)

(14,483)



16,410

15,587

5,530

Cash generated from the business





Cash generated from operations


37,038

37,256

65,326

Interest received


548

179

449

Interest paid


(652)

(352)

(1,082)

Dividends earned from associates


-

-

-



36,934

37,083

64,693

Free cash flow from the business





Cash generated from the business


36,934

37,083

64,693

Tax paid


(4,200)

(2,783)

(11,589)



32,734

34,300

53,104

 

*  The Consolidated Cash Flow Statement as at 31 March 2011 has been restated to separate out the following captions; foreign exchange, barter sales, utilisation of venue loans and advances, fair value of cash flow hedges released to the income statement and cash received on settlement of forward contracts for greater clarity.

 

 

 

Notes to the Interim Financial Statements

 

1. General Information and basis of preparation

               

The information for the year ended 30 September 2011 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 2012. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2011 except as described below.


The following new standards, amendments to standards and interpretations are mandatory for the period ending 31 March 2012, and have been adopted but have had no impact on the 2012 Group interim statements;

 

IAS 24 (revised) Related party disclosures;

Amendment to IFRIC 14 Prepayments on a minimum funding requirement;

Amendment to IFRS 7 Financial instruments disclosures;

Amendment to IAS 12 Deferred tax: Recovery of underlying assets;

Amendment to IAS 1 Presentation of items of other comprehensive income;

 

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective;

 

Amendments to IAS 19 'Employee Benefits';

IFRS 10 Consolidated Financial Statements;

IFRS 11 Joint arrangements;

IFRS 12 Disclosure of interests in other entities;

IFRS 13 Fair value measurement;

Reissue of amended IAS 27 'Consolidated and Separate Financial Statements' as IAS 27 'Separate Financial Statements';

Reissue of amended IAS 28 'Investments in Associates' as IAS 28 'Investments in Associates;

 

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 Andy Braid, Neil Jones (Financial Director), Stephen Keen, Suzanne King, Alexander Shtalenkov, Edward Strachan (Executive Director), Russell Taylor (Chief Executive Officer) and Colette Tebbutt 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.  

ITE Group evaluates performance on the basis of profit or loss from operations before tax expense excluding non-recurring gains and losses and foreign exchange gains and losses.

The revenue and profit before taxation are attributable to the Group's one principle activity, the organization of trade exhibitions, conferences and related activities and can be analysed by geographic segment as follows:

 

Six months ended 31 March 2012

Unaudited

Russia

Central Asia & Caucasus

Eastern & Southern Europe

UK & Western Europe

Rest of World

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

40,289

11,633

10,884

4,536

1,267

68,609

Result

12,724

3,482

1,448

(10,558)

(473)

6,623


________

________

________

________

________

_______

By origin of sale







Revenue

31,843

5,966

8,913

20,181

1,706

68,609

Result

3,373

1,247

(2,199)

3,636

566

6,623


_______

________

________

_______

________

_______

Operating profit






6,623

Investment revenue






590

Finance costs






(882)







_______

Profit before tax






6,331

Tax






(1,362)







_______

Profit after tax






4,969







________

Capital expenditure

356

17

54

147

14

588

Depreciation and amortisation

4,243

50

2,189

91

124

6,697

Balance Sheet







Assets *

105,082

11,331

53,654

57,312

2,460

229,839


________

________

________

________

________

________








Liabilities *

(55,193)

(7,659)

(27,465)

(48,898)

(201)

(139,416)


________

________

________

________

________

_______

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

The revenue in the period of £68.6 million includes £0.3 million of barter sales.

 

 

Six months ended 31 March 2011

Unaudited

 

 

Russia

 

 

Central Asia & Caucasus

 

 

Eastern & Southern Europe

 

 

UK & Western Europe

 

 

Rest of World

 

 

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

26,672

10,304

10,617

4,518

931

53,042








Result

8,446

3,443

2,445

(10,069)

(557)

3,708


________

________

________

________

________

_______

By origin of sale







Revenue

18,180

4,824

8,824

20,711

503

53,042

Result

1,459

1,388

(1,069)

2,541

(611)

3,708


_______

________

________

_______

________








_______

Operating profit






3,708

Investment revenue






193

Finance costs






(384)







_______

Profit before tax






3,517

Tax






(717)







_______

Profit after tax






2,800







________

Capital expenditure

479

21

-

307

4

811

Depreciation and amortisation

3,026

50

1,890

150

145

5,261








Balance Sheet







Assets *

108,851

10,886

31,497

63,293

3,973

218,500


________

________

________

________

________

________








Liabilities *

(71, 187)

(4,122)

(6,530)

(57,687)

(1,025)

(140,551)


________

________

________

________

________

_______

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

The revenue in the period of £53.0 million includes £0.2 million of barter sales.

 

 

Year ended 30 September 2011

Audited

 

 

Russia

 

 

Central Asia & Caucasus

 

 

Eastern & Southern Europe

 

 

UK & Western Europe

 

 

Rest of World

 

 

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

105,650

21,853

17,940

8,950

1,063

155,456








Result

47,320

7,852

4,042

(17,975)

(1,240)

39,999


________

________

________

________

________

_______

By origin of sale







Revenue

71,594

10,998

15,981

56,841

42

155,456

Result

25,831

3,562

(1,324)

12,919

(989)

39,999


_______

________

________

_______

________








_______

Operating profit






39,999

Investment revenue






582

Finance costs






(1,487)







_______

Profit before tax






39,094

Tax






(8,292)







_______

Profit after tax






30,802







________

Capital expenditure

680

117

21

456

-

1,274

Depreciation and amortisation

6,612

176

4,002

586

271

11,647








Balance Sheet







Assets *

99,078

13,061

41,138

66,006

2,774

222,057


________

________

________

________

________

________








Liabilities *

(51,786)

(5,718)

(20,804)

(48,360)

(1,603)

(128,271)


________

________

________

________

________

_______

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

The revenue in the period of £155.5 million includes £0.5 million of barter sales.

 

3. Investment revenue


Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011


Unaudited

Unaudited

Audited


£000

£000

£000





Interest receivable from bank deposits

548

179

437

Interest receivable from Inland Revenue repayments

-

-

12

Gain on derivative financial instruments

42

14

14

Gain on settlement of contingent consideration

-

-

119


__________

__________

__________


590

193

582


__________

__________

__________

 

4. Finance costs


Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011


Unaudited

Unaudited

Audited


£000

£000

£000





Interest on bank loans and overdrafts

443

177

741

Bank charges

209

175

341

Loss on exercise of Ekin Fuar put option

-

-

269

Loss on settlement of contingent consideration

-

-

104

Loss on derivative financial instruments

-

32

32

Imputed interest charge on discounted put option liabilities

230

-

-


__________

__________

__________


882

384

1,487


__________

__________

 

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


Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011


Unaudited

Unaudited

Audited






£000

£000

£000





Profit on ordinary activities before taxation

6,331

3,517

39,094

Amortisation of acquired intangibles

6,146

4,801

10,717

Loss on exercise of Ekin Fuar put option

-

-

269

Gain on settlement of contingent consideration

-

-

(119)

Loss on settlement of contingent consideration

-

-

104

Transaction costs (completed and pending)

438

810

1,180

Impairment of goodwill

-

-

130

Imputed interest charge on discounted put option liabilities

230

-

-


__________

__________

__________

Headline pre-tax profit

13,145

9,128

51,375


__________

__________

__________

 

6.   Taxation


Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011


Unaudited

Unaudited

Audited






£000

£000

£000

Current tax




     UK corporation tax

570

782

2,526

     Foreign tax

1,959

1,165

8,127


__________

__________

__________


2,529

1,947

10,653

Deferred tax

(1,167)

(1,230)

(2,361)


__________

__________

__________

Tax on profit on ordinary activities

1,362

717

8,292


__________

__________

__________

 

Tax rate at the interim is charged at 21.5% (2011: 23%) representing the best estimate of the weighted average annual corporation tax expected for the financial year.

 

7. Dividends


Six months to 31 March 2012

Six months to 31 March 2011

Year ended 30 September 2011


Unaudited

Unaudited

Audited


£000

£000

£000

Final dividend for the year ended 30 September 2011

of 4.2p (2010: 4.0p) per ordinary share

 

10,109

 

9,537

 

9,537


__________

__________

__________


-



Interim dividend for the year ended 30 September 2011 of 1.9p per ordinary share

-

-

4,568





Proposed interim dividend for the year ending 30 September 2012 of 2.1p (2011: 1.9p)  per ordinary share

 

5,087

 

4,566

 

-


__________

__________

__________

 

The proposed interim dividend was approved by the Board on 17 May 2012 and has not been included as a liability as at 31 March 2012.

 

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

2012

Unaudited

Six months

to 31 March

2011

Unaudited

Year ended 30 September

2011

Audited

Six months

to 31 March

2012

Unaudited

Six months

to 31 March

2011

Unaudited

Year ended 30 September

2011

Audited








£000

£000

£000

£000

£000

£000







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

 

 

 

5,099

 

 

 

2,680

 

 

 

30,724

 

 

 

5,099

 

 

 

2,680

 

 

 

30,724

Amortisation of acquired intangibles

 

6,146

 

4,801

 

10,717

 

-

 

-

 

-

Tax effect of amortisation

 

(1,321)

 

(1,052)

 

(2,358)

 

-

 

-

 

-

Transactional  costs

438

810

1,180

-

-

-

Loss on Exercise of Ekin Fuar Put Option

-

-

269



-

Loss on Settlement of Contingent Consideration

-

-

104

-

-

-

Gain on Settlement of Contingent Consideration

-

-

(119)

-

-

-

Tax effect of other adjustments

-

-

(27)

-

-

-

Impairment of Goodwill

-

-

130

-

-

-

Imputed interest charge on discounted put option liabilities

230

-

-

-

-

-


________

________

________

________

______

________


10,592

7,239

40,620

5,099

2,680

30,724


________

________

________

________

________

________

 

 

 


Six months to

31 March 2012

Six months to

31 March 2011

Year ended

30 September 2011



Number of shares ('000)

Number of shares ('000)

Number of shares ('000)

Weighted average number of shares:





For basic earnings per share


 

240,954

 

238,852

 

239,635

Dilutive effect of exercise of share options


 

3,725

 

4,125

 

5,132



___________

___________

___________

For diluted earnings per share


 

244,679

 

242,977

 

244,767

 

 

 

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 businesses

Autoexpo

On 2 December 2011 the Group's Ukrainian subsidiary purchased the exhibition assets of Limited Liability Company Autoexpo ('Autoexpo') for cash consideration paid of US$6 million (£3.8 million).

The acquisition of this company is consistent with ITE's strategy of expanding its business model into new sectors in existing markets.

The Group incurred transaction costs of £0.1m in relation to this acquisition.

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

Assets acquired

Book value
£000

Adjustments
£000

Fair value
£000

Property, plant and equipment

31

-

31

Intangible fixed assets - Trademarks

-

1,679

1,679

Intangible fixed assets - Customer relationships

-

1,344

1,344


_________

___________

___________

Net assets acquired

31

3,023

3,054


_________

___________

___________

Goodwill arising on acquisition



710




___________

Total cost of acquisition



3,764

Satisfied by net cash paid



3,764

The exhibition assets acquired are a portfolio of 10 exhibitions, including SIA, the Kyiv International Autosalon as well as others operating in ITE's core market sectors of travel and tourism, building and construction and oil and gas. 

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 (£0.7 million) represents the perceived value placed by the Group of having an established operating position in a new emerging market.  The goodwill and intangible assets are expected to qualify for tax deductions in Ukraine. No deferred tax liabilities arise in relation to the acquired intangible assets.

The acquired business has contributed £0.1 million to Group revenue and a loss of £0.2 million to profit before tax since acquisition.  If the acquisition had occurred on 1 October 2011 the acquired business would have contributed approximately £0.5m to Group revenue and £0.2m to profit before tax in the period.

On 10 February 2012 the Group acquired 100% of the share capital of Expo.KZ LLP for consideration of $650,000 (£410,000), some of which was paid in April 2012. The assets acquired comprise a small number of trade events in Kazakhstan.

 

10. Goodwill


2012
£000

At 1 October

70,684

Addition of Autoexpo

710

Exchange differences

2,297


_________

At 31 March 

73,691


_________

 

11. Other intangible assets

 


2012
£000

At 1 October

58,867

Addition of Autoexpo

3,019

Addition of Expo.KZ LLP

410

Addition of computer software

227

Amortisation of intangibles in the period

(6,146)

Exchange differences

1,546


_________

At 31 March 

57,923


_________

 

12. Trade and other receivables


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


£000

£000

£000





Trade receivables

25,786

21,841

35,299

Other receivables

4,825

3,526

2,272

Venue advances and prepayments

8,176

5,774

6,015

Prepayments and accrued income

14,104

13,890

8,037


___________

___________

___________


52,891

45,031

51,623


___________

___________

___________

 

13. Trade and other payables


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


£000

£000

£000





Trade payables

1,102

978

879

Taxation and social security

2,660

2,645

3,169

Other payables

3,651

4,172

3,104

Accruals

9,356

7,937

8,475

Deferred consideration

314

4,600

-

Contingent consideration

3,099

3,515

4,139


___________

___________

___________


20,182

23,847

19,766


___________

___________

___________

 

14. Bank loan and overdraft


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


£000

£000

£000





Current liabilities




Bank overdraft

7,822

17,752

13,948

Bank loan

14,025

-

-


___________

___________

___________


21,847

17,752

13,948


___________

___________

___________

Non-current liabilities




Bank loan

-

9,633

14,483


___________

___________

___________


-

9,633

14,483


___________

___________

___________

 

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.

The Group has a secured bank loan of £14.0 million as at 31 March 2012 (31 March 2011: 9.6 million, 30 September 2011: £14.4 million) denominated in Euros. The loan is fully repayable in November 2012 so is shown as a current liability at 31 March 2012. 

 

 

15. Derivative financial instruments


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011

Audited


£000

£000

£000

Current assets




Foreign currency forward contracts

1,007

345

221


___________

___________

___________


1,007

345

221


___________

___________

___________

Non-current assets




Foreign currency forward contracts

838

-

79


___________

___________

___________


838

-

79


___________

___________

___________

 


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011

Audited


£000

£000

£000

Current liabilities




Foreign currency forward contracts

-

694

215

Put options

1,258

603

691


___________

___________

___________


1,258

1,297

906


___________

___________

___________

Non-current liabilities




Foreign currency forward contracts

18

1,791

762

Put options

11,570

1,685

11,951


___________

___________

___________


11,588

3,476

12,713


___________

___________

___________

 

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 2012 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 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


€000

€000

€000





Foreign currency forward contracts

84,950

9,000

28,250


___________

___________

___________


84,950

9,000

28,250


___________

___________

___________

 

Derivative liabilities

 


Six months to 31 March 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


€000

€000

€000





Foreign currency forward contracts

10,450

103,150

66,400


___________

___________

___________


10,450

103,150

66,400


___________

___________

___________

 

The arrangements as at 31 March 2012 cover exchange exposures over the next 36 months, with €71.8 million covering exposures after September 2012.   These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity.

At 31 March 2012, the fair value of these derivatives is estimated to be an asset of approximately £1.8 million (31 March 2011: liability of £2.1 million on forward contracts; 30 September 2011: liability of £0.7 million on forward contracts). This is based on market valuations.  This amount has been deferred in equity at 31 March 2012.

 

Put options

The Group has been 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 2012

Unaudited

Six months to

31 March 2011

Unaudited

Year ended

30 September 2011 Audited


£000

£000

£000





Put option for Ekin Fuar

777

1,206

691

Put option for Summit Trade Events Limited

999

1,082

1,082

Put option for Scoop

481

-

440

Put option for Yem Fuar

10,571

-

10,429


___________

___________

___________


12,828

2,288

12,642


___________

___________

___________









 

16. Share capital

 


Six months to 31 March 2012 Unaudited

Six months to 31 March 2011 Unaudited

Year ended 30 September 2011

Audited


£000

£000

£000

Authorised




375,000,000 ordinary shares of 1 penny each

(31 March 2011: 375,000,000)            

3,750

3,750

3,750


__________

__________

__________

Allotted and fully-paid




248,838,407 ordinary shares of 1 penny each

(31 March 2011: 248,568,749)

2,488

2,486

2,486


__________

__________

__________

 

During the period, the Company allotted 269,658 (2011: 248,568) ordinary shares of 1 penny each pursuant to the exercise of share options. The total consideration for the shares issued was £40,722 (2011: £38,478).

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

17.  Events after the balance sheet date

 On the 3rd April the group acquired Beautex Co LLC for a total consideration of €8.6m (£7.2 million), subject to the profits of Intercharm 2011 and BeautyExpo 2012.

On 10th May the group acquired certain trade and exhibition assets of Unitech Exhibitions Pvt. Ltd, a private company operating in India. Two events were acquired; Roof India and Hand Tools & Fasteners Expo for consideration of 115 million Indian Rupees (£1.3m).

Due to the proximity of these acquisitions to the date of signing these accounts, the IFRS 3 acquisition accounting has not been finalised and the associated IFRS 3 disclosures are therefore to be completed.

18.  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 2012. 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 £35,000 (31 March 2011: £24,000; 30 September 2011: £54,000). 

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 £95,000 (31 March 2011: £94,000; 30 September 2011: £190,000). 

During the period ended 31 March 2012 consultancy fees of £120,000 (31 March 2011: £120,000; 30 September 2011: £303,000) were paid to Kyzyl Tan Eurasian Advisors Limited ("Kyzyl Tan"), of which Edward Strachan is a significant shareholder.  Kyzyl Tan was also paid a living away from home allowance of £19,000 (30 September 2011: £38,000). These payments were made under a contract for Kyzyl Tan to provide the services of Edward Strachan to the Group.

 

19.        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.

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.

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. ITE, through its relationships with venues and staff has a relatively flexible cost structure, allowing it to manage its event margins in the short and medium term. This was evidenced by the Company's performance during the recent recession.

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. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.

Commercial relationships

The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future. A significant change in relationship could impact the Group's ability to operate its events. 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 to 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 on its largest events against such an event in the short term. In the longer term the Group seeks to maintain good relationships with its principal venues to ensure the continuance of availability.

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, reduces 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 through both growth and recessionary times.

 

Financial risk - foreign currency risk

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 which forms the base books of the Group's Russian operations. The Group seeks to minimise exposure by protecting a certain amount of Euro denominated sales with forward contracts and utilising currency overdraft and term loan facilities to hedge foreign currency balance sheet assets.

Recent guidance released by the Financial Reporting Council ("FRC") requires the Group to comment on its exposure to risks from the Eurozone crisis. The Group's liquidity risk (its ability to service short term liabilities) is considered low in all scenarios bar a fundamental collapse of the financial markets. Whilst the Group's revolving credit facility is normally at least partially drawn in Euros (€16.7m at 16 May 2012) this could alternatively be drawn in other currencies (Sterling or US$), and at 16 May 2012 there is headroom of £13.5m on the Group's borrowing facilities. As at 18 May 2012 the Group also held Euro denominated cash balances of € 12.1m with only €4.2m held in banks within the euro zone.

 

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

 

18 May 2012

 

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 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 19. 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 2012 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 Auditor

London, United Kingdom

18 May 2012

 



Directors and professional advisers

 

Directors

Marco Sodi, non-executive Chairman

Russell Taylor, Chief Executive Officer
Neil England, non-executive Director

Michael Hartley, non-executive Director

Linda Jensen, non-executive Director

Neil Jones, Group Finance Director

Edward Strachan, executive Director

 

Company Secretary

John Price

 

Registered office

ITE Group Plc

105 Salusbury Road

London, NW6 6RG

 

Registration number                                                         

1927339

Auditor                                 

Deloitte LLP

London

 

Solicitors                                                              

Olswang

90 High Holborn

London, WC1V 6XX

 

Principal Bankers

Barclays Bank plc

27 Soho Square

London, W1D 3QR

 

Company Brokers

Numis Securities Limited

The London Stock Exchange Building

10 Paternoster Square

London, EC4M 7LT

 

Registrars

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

 

Public Relations

Financial Dynamics

Holborn Gate

26 Southampton Buildings

London, WC2A 1PB

 

Website

www.ite-exhibitions.com

 

 

Financial calendar

 

Interim dividend

Record date                                                                                         6 July 2012

Payment date                                                                                      9 August 2012

 

Final dividend

Record date                                                                                         January 2013

Payment date                                                                                      February 2013

 


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