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ITE Group PLC (HYVE)

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Monday 19 May, 2014

ITE Group PLC

Half Yearly Report

RNS Number : 4059H
ITE Group PLC
19 May 2014
 



19 May 2014

ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT

Strong H1 profits

 


Six months to

31 March 2014

Six months to

31 March 2013




Volume sales

320,100 m2

352,500 m2




Revenue

£71.2m

£69.4m




Pre-tax profit

£12.2m

£2.6m




Headline pre-tax profit*

£18.2m

£11.1m




Diluted earnings per share

4.3p

0.9p




Headline diluted earnings per share**

6.0p

3.7p




Interim dividend per share

2.5p

2.3p




Net (debt)/cash

(£1.8)m

£21.7m

 

·        Headline pre-tax profits up 64% to £18.2 million

·        Underlying business reports volume growth of 2%

·        Continuing strong cash generation; net debt as at 31 March of £1.8 million after £38 million investment  

·        Acquisitions in China and in Turkey are trading well

·        Booked revenues for the current financial year of £158 million as at 16 May 2014

·        Confidence in full year outcome

 

Russell Taylor, CEO of ITE Group plc, commented:

"ITE has delivered a strong performance over the first half of the year with revenue growth in the Group's main markets allied to a stronger biennial pattern in the first half of the year. Our recent acquisition of Beauty Eurasia in Turkey and a 50% investment stake in the Chinese Chinacoat/Surface Finishing exhibition represents more progress in achieving the Group's strategic objectives.

 

"Looking forward, we continue to seek opportunities to expand the business with investments that are consistent with our strategy of building market leading positions in higher growth markets. The Group is in a strong financial position and operates a resilient business model. With good visibility on current year bookings, the Board has confidence in the full year outcome."

 

*  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, direct costs on completed and pending acquisitions & disposals and tax on income from associates - 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.

Where used, like-for-like growth is on an actual currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences and biennial events.

 

Enquiries:

 

Russell Taylor, Chief Executive

Neil Jones, Group Finance Director

ITE Group plc

020 7596 5000

Charles Palmer/Emma Appleton

FTI Consulting

020 3727 1021

James Serjeant

Numis

020 7260 1309

 

ITE has delivered a good set of results for the first six months despite the turbulent political backdrop surrounding Ukraine and Russia since the turn of the year. Revenues are 2.5% ahead of the same time last year and Headline profits before tax of £18.2 million are a substantial increase over last year's equivalent result of £11.1 million. In addition to developing the portfolio of events organically, the Group continues to seek opportunities to expand its business with investments which are consistent with its overall strategy of building market leading positions in higher growth markets.

 

During the first six months of this financial year, the Group made further progress in expanding its business in Turkey, Asia and the UK. On 15 October 2013, the Group purchased the Beauty Eurasia event for £8.4 million in cash, £2.7 million of which is deferred. Beauty Eurasia is an annual event that takes place in Istanbul which serves the beauty, personal care and cosmetics industries in Turkey and the surrounding region. On 18 November 2013, the Group purchased a 50% investment in Sinostar which runs the ChinaCoat /SF China exhibitions for £34 million in cash, £30 million of which was paid on completion with the balance due for payment in June 2014. The exhibition serves the growing industries of paints, coatings and surface finishing in China and SE Asia. The 2013 edition took place in Shanghai on 20 November selling 34,500 sqm net and was attended by over 36,000 professional visitors, in line with our expectations at the time of the acquisition. In the UK the Group acquired the remaining 60%, which it did not already own, of Scoop a high-end London fashion event for the womenswear sector.

 

Financial performance

 

Revenues for the first six months of the year were £71.2 million (2013: £69.4 million) reflecting good revenue growth in ITE's main markets allied to a stronger biennial pattern in the first half of this year. These positive factors were offset by the effects of weaker exchange rates across most emerging market currencies and the decision to discontinue the large but low margin events IMOB and TATEF in Turkey.

 

Headline profit before tax for the first six months of the year was £18.2 million (2013: £11.1 million). The principal factors affecting the change in profits were net organic growth of £2.1 million, a contribution of £2.6 million from the newly acquired investment in Sinostar and changes in the biennial pattern and timing of events, which accounted for £2.4 million of first half profits.

 

Reported profits before tax were £12.2 million (2013: £2.6 million). Fully diluted earnings per share for the first six months were 4.3p (2013: 0.9p) and headline diluted earnings per share for the first six months were 6.0p (2013: 3.7p). The Group has a strong balance sheet and continues to generate positive cash flow; cash generated from operations over the first six months was £29.4 million (2013: £39.7 million) and during the period £38 million has been applied to acquisitions and £11.6 million to dividends. The Group had net debt of £1.8 million (2013: £21.7 million cash) at 31 March 2014.

 

Board and management

 

On 25 March 2014 the Board announced the appointment of Sharon Baylay as a non-executive Director with effect from 1 April 2014. Sharon is a member of ITE's Audit and Remuneration Committees. She brings a wealth of international marketing, branding and communications experience which together with a strong understanding of digital marketing from her background with Microsoft and as Marketing Director at the BBC.  On 25 March 2014, the Board also announced Edward Strachan had stepped down as a Director with effect from 31 March 2014. He will continue in his existing management role as Regional Director for ITE's Central Asian offices.

 

Dividend

 

The Board has approved and increased the interim dividend by 9% to 2.5p per share (2013: 2.3p 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 mixed trading conditions with growth in Moscow and the Central Asian markets but with more challenging conditions being experienced in regional Russia, Ukraine and the UK. During the period the Group organized 136 events (2013: 109 events) which generated like-for-like revenues (after making a £7.1m adjustment for discontinued events) 1% higher than for the same period last year despite the negative impact of circa  £8 million from lower foreign exchange translation rates (+12% on a constant currency basis). Actual volume sales for the period of 320,100 sqm (2013: 352,500 sqm) were 9% lower than last year's equivalent, mostly reflecting the discontinued Turkish events but partially offset by a stronger biennial pattern and positive timing differences. The underlying business (like-for-like excluding the discontinued events) reported volume sales growth of 2%. A summary of the Group's exhibition business sales and profits for the first six months of the year is set out below.

 

First half 2013

353

69.4

25.4

Non-annual 2013

(2)

(0.3)

(0.1)

Annually recurring

351

69.1

25.3

Acquisitions

2

1.0

0.4

Timing differences

12

2.5

1.1

Discontinued events

(79)

(7.1)

(0.4)

FX Translation

-

(7.8)

(2.2)

Organic increase

6

8.2

2.7

Non-annual 2014

28

5.3

1.7

First half 2014

320

71.2

28.6

 

Russia

 

Volume sales in Russia over the first six months of the year were 9% higher as a result of the return of two biennial events; the printing exhibition, Polygraphinter, and the woodworking machinery event, Woodex. On a like-for-like basis volume sales were 1% ahead reflecting a mix of good performance in Moscow offsetting weaker performances in Novosibirsk and Krasnodar.

 

Moscow performed well over the first half of the financial year, with like-for-like volume sales up 5% led by a return to growth of the Moscow International Travel & Tourism event, which delivered sales of 20,300sqm (2013: 19,400sqm) and strong growth in the Pharma portfolio. Both Krasnodar and Novosibirsk saw volumes fall by around 10% largely in their construction events where overall marketing spend was affected by construction activity on the Sochi Winter Olympic project. St. Petersburg benefited from some small new launches in the period but the majority of its events take place in the second half of the year.

 

Central Asia & the Caucasus

 

Volume sales for the first six months in Central Asia and the Caucasus were 23% higher than for the comparative period, partly due to timing differences on a number of events mainly in Uzbekistan. Volume sales were ahead by 13% on a like-for-like basis.

 

The largest part of the Group's business in the region is Kazakhstan, which reported a small decline in like-for-like volumes sales. The largest event in the region is the Kazakhstan International Oil & Gas Exhibition (KIOGE), which was slightly smaller than the previous edition with volume sales of 8,000sqm. The strongest growth in the region has again been in Azerbaijan which enjoys a good trading environment and the Group's business here continues to grow into the new larger venue facilities realising good volume and revenue growth across the portfolio.

 

Eastern & Southern Europe

 

Consistent with the comments made at the time of the pre-close statement, business performance in Ukraine has been affected by the on-going political troubles. The business, which will represent less than 5% of Group profits this year, has run its normal programme of exhibitions to date, all of which take place in Kiev, albeit with fewer exhibitors and visitors than in previous years. The Group expects the profits from the Ukrainian business for the full year to be circa £2.5 million less than normal, mostly affecting exhibitions to be reported in the second half of the year. Overall volumes sales were 19% below the comparative period with the smaller part of the portfolio in Autumn 2013 performing well, but events taking place this year increasingly reflecting the political tensions in the area.

 

In Turkey, as part of ITE's on-going review of its event portfolio, the Group discontinued two high volume, low margin events, IMOB (furniture) and TATEF (industrial machinery), which led to a reduction in volume sales over the period of circa 50%. The remaining events performed well and the region reported an increase in profits over the comparative period. Turkeybuild, the pre-eminent construction event in Turkey (which remains capacity constrained until the 2015 event) took place in early May and delivered its largest ever event at 36,300sqm.

 

Asia

 

In Asia, the Group's activities are largely conducted through joint venture arrangements, ABEC in India and Sinostar in China, both of which are accounted for through the associate and joint venture line in the profit and loss account. ABEC has performed well delivering an increase in profits from its Indian construction portfolio and completing the successful launch of the India International Travel and Tourism event. The Group's 100% owned subsidiary in India reported a good result from its biennial Paperex event which grew volumes by over 15%.

 

UK

 

Following the exercise of its call option the UK fashion portfolio now owns 100% of Scoop, its London based designer lead womenswear event. The event grew strongly which helped the Group to offset a decline of 9% in volumes in its largest event, MODA, which in common with many European fashion events experienced a difficult Spring season.

 

April/May trading

 

April is the largest trading month for the Group. Mosbuild delivered a solid performance, but in common with other construction businesses in Russia reported lower volumes than for last year's comparable event.  Other leading events in April reported a mix of performances with the Moscow International Protection & Security growing but TransRussia impacted by a slowdown in one sector.

 

Set out below are the results for the Group's principal events taking place in April and early May 2014:

 


2014 sqm.

2013 sqm.

Mosbuild

65,300

68,700

Turkeybuild

36,300

36,200

Moscow International Protection & Security

11,700

11,400

TransRussia

10,000

11,300

 

Outlook

 

As at 16 May 2014, the Group had booked revenues for the current financial year of £158 million (2013: £174 million). On a like-for-like basis this represents a decrease of 8% over the comparable figure for last year, although on a constant currency basis this would have been 5% ahead.

 

The Group enters the second half of the year in a strong financial position and continues to generate high levels of cash.  It operates a resilient business model and is well placed to continue to diversify its business into new market leading positions and geographies. There remains much political uncertainty surrounding Russia-Ukraine and Russian economic indicators now suggest lower levels of growth for the remainder of 2014. The Board is monitoring carefully any developments and their implications for ITE's business but with good visibility on current year bookings the Board remain confident in the full year outcome and in the Group's future prospects.

 

Going Concern

 

As stated in note 20 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 2014

 



Six months to
31 March 2014


Six months to 31 March 2013


Year ended 30 September 2013



Unaudited


Unaudited


Audited









Notes

£000


£000


£000








Revenue


71,157


69,446


192,261

Cost of sales


(42,556)


(44,047)


(104,118)



__________


__________


__________

Gross profit


28,601


25,399


88,143

Other operating income


181


157


278

     Administrative expenses before amortisation


(15,155)


(16,409)


(31,229)

     Amortisation of acquired intangibles

11

(6,070)


(7,350)


(13,116)

     Foreign exchange gain/(loss) on operating activities


1,670


186


(154)

Total administrative expenses


(19,555)


(23,573)


(44,499)

Share of results of associate and joint ventures

12

2,594


651


1,080



__________


__________


__________

Operating profit


11,821


2,634


45,002

Investment revenue

3

1,231


764


1,063

Finance costs

4

(838)


(759)


(2,171)



__________


__________


__________

Profit on ordinary activities before taxation

5

12,214


2,639


43,894

Tax on profit on ordinary activities

6

(1,663)


(548)


(8,223)



__________


__________


__________

Profit for the period


10,551


2,091


35,671



__________


__________


__________

Attributable to:







      Owners of the Company


10,523


2,212


34,665

      Non-controlling interests


28


(121)


1,006



__________


__________


__________



10,551


2,091


35,671



__________


__________


__________








Earnings per share (p)







Basic

8

4.3


0.9


14.2

Diluted

8

4.3


0.9


14.0



__________


__________


__________

 

 

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

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2014



Six months to
31 March 2014

Six months to
31 March 2013

Year ended 30 September 2013



Unaudited

Unaudited

Audited








£000

£000

£000






Profit for the period attributable to shareholders


10,551

2,091

35,671

Cash flow hedges:










    Movement in fair value of cash flow hedges


687

(5,211)

(4,623)

    Fair value of cash flow hedges released to the income statement


193

(531)

(1,031)

Currency translation movement on net investment in subsidiary undertakings


(12,194)

6,630

(7,054)



__________

__________

__________



(763)

2,979

22,963



__________

__________

__________






Tax relating to components of comprehensive income


(186)

1,002

1,393



__________

__________

__________

Total comprehensive income for the period


(949)

3,981

24,356



__________

__________

__________

Attributable to:





     Owners of the Company


(977)

4,102

23,350

     Non-controlling interests


28

(121)

1,006



__________

__________

__________



(949)

3,981

24,356



__________

__________

__________

 

All items recognised in comprehensive income may be reclassified subsequently to the income statement.

 

The notes on pages 16 to 34 form an integral part of the consolidated financial statements.

 

Condensed Consolidated Statement of Changes in Equity

31 March 2014

 

 


Six month period ended 31 March 2014 (Unaudited):

 










 

 

 

 

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 2013

2,494

2,938

2,746

457

(3,530)

119,335

(7,108)

(12,120)

(433)

104,779

4,519

109,298














Net profit for the period

 -

 -

 -

 -

 -

10,523

 -

 -

 -

10,523

28

10,551

Currency translation movement on net investment in subsidiary undertakings

 -

 -

 -

 -

 -

 -

 -

(12,194)

 -

(12,194)

 -

(12,194)

Movement in fair value of cash flow hedges

 -

 -

 -

 -

 -

 -

 -

 -

687

687

 -

687

Fair value of cash flow hedges released to the income statement

 -

 -

 -

 -

 -

 -

 -

 -

193

193

 -

193

Tax relating to components of comprehensive income

 -

 -

 -

 -

 -

(186)

 -

 -

 -

(186)

 -

(186)

Total comprehensive income for the 6 month period ending
31 March 2014

 -

 -

 -

 -

 -

10,337

 -

(12,194)

880

(977)

28

(949)














Dividends paid

 -

 -

 -

 -

 -

(11,581)

 -

 -

 -

(11,581)

(425)

(12,006)

Exercise of options

3

8

 -

 -

1,444

(54)

 -

 -

 -

1,401

 -

1,401

Share-based payments

 -

 -

 -

 -

 -

833

 -

 -

 -

833

 -

833

Purchase of shares for ESOT

 -

 -

 -

 -

(2,751)

 -

 -

 -

 -

(2,751)

 -

(2,751)

Tax credited to equity

 -

 -

 -

 -

 -

(12)

 -

 -

 -

(12)

 -

(12)

Recognise put option on acquisition of subsidiary

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2014

2,497

2,946

2,746

457

(4,837)

118,858

(7,108)

(24,314)

447

91,692

4,122

95,814


 

 

 

 

 

 

 

 

 

 

 

 

 

 



Condensed Consolidated Statement of Changes in Equity

31 March 2014

 

Six month period ended 31 March 2013 (Unaudited):

 










 

 

 

 

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 2012

2,489

2,793

2,746

457

(5,183)

101,183

(11,510)

(5,066)

5,221

93,130

6,696

99,826














Net profit for the period

-

-

-

-

-

2,212

-

-

-

2,212

(121)

2,091

Currency translation movement on net investment in subsidiary undertakings

-

-

-

-

-

-

-

6,630

-

6,630

-

6,630

Movement in fair value of cash flow hedges

-

-

-

-

-

-

-

-

(5,211)

(5,211)

-

(5,211)

Fair value of cash flow hedges released to the income statement

-

-

-

-

-

-

-

-

(531)

(531)

-

(531)

Tax relating to components of comprehensive income

-

-

-

-

-

1,002

-

-

-

1,002

-

1,002

Total comprehensive income for the 6 month period ending
31 March 2013

-

-

-

-

-

3,214

-

6,630

(5,742)

4,102

(121)

3,981














Exercise of options

2

-

-

-

773

(444)

-

-

-

331

-

331

Dividends paid

-

-

-

-

-

(10,717)

-

-

-

(10,717)

(521)

(11,238)

Share-based payments

-

-

-

-

-

984

-

-

-

984

-

984

Tax credited to equity

-

-

-

-

-

77

-

-

-

77

-

77

Recognise put option on acquisition of subsidiary

-

-

-

-

-

-

(1,215)

-

-

(1,215)

-

(1,215)


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2013

2,491

2,793

2,746

457

(4,410)

94,297

(12,725)

1,564

(521)

86,692

6,054

92,746


 

 

 

 

 

 

 

 

 

 

 

 

 



 

Year ended 30 September 2013 (Audited):

 










 

 

 

 

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 2012

2,489

2,793

2,746

457

(5,183)

101,183

(11,510)

(5,066)

5,221

93,130

6,696

99,826














Net profit for the period

 -

 -

 -

 -

 -

34,665

 -

 -

 -

34,665

1,006

35,671

Currency translation movement on net investment in subsidiary undertakings

 -

 -

 -

 -

 -

 -

 -

(7,054)

 -

(7,054)

 -

(7,054)

Movement in fair value of cash flow hedges

 -

 -

 -

 -

 -

 -

 -

 -

(4,623)

(4,623)

 -

(4,623)

Fair value of cash flow hedges released to the income statement

 -

 -

 -

 -

 -

 -

 -

 -

(1,031)

(1,031)

 -

(1,031)

Tax relating to components of comprehensive income

 -

 -

 -

 -

 -

1,393

 -

 -

 -

1,393

 -

1,393

Total comprehensive income for the year ended 30 September 2013

 -

 -

 -

 -

 -

36,058

 -

(7,054)

(5,654)

23,350

1,006

24,356














Dividends paid

 -

 -

 -

 -

 -

(16,361)

 -

 -

 -

(16,361)

(1,254)

(17,615)

Exercise of options

5

145

 -

 -

1,653

(1,249)

 -

 -

 -

554

 -

554

Share-based payments

 -

 -

 -

 -

 -

2,219

 -

 -

 -

2,219

 -

2,219

Tax credited to equity

 -

 -

 -

 -

 -

458

 -

 -

 -

458

 -

458

Acquisition of subsidiary

 -

 -

 -

 -

 -

 -

(1,215)

 -

 -

(1,215)

715

(500)

Exercise put option on acquisition of subsidiary

 -

 -

 -

 -

 -

(2,973)

5,617

 -

 -

2,644

(2,644)

 -


 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 30 September 2013

2,494

2,938

2,746

457

(3,530)

119,335

(7,108)

(12,120)

(433)

104,779

4,519

109,298


 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Financial Position

31 March 2014

 

 

 




31 March 2014

31 March 2013

30 September 2013



Unaudited

Unaudited

Audited


Notes

£000

£000

£000

Non-current assets





Goodwill

10

76,325

82,767

78,575

Other intangible assets

11

42,087

54,757

43,734

Property, plant & equipment


2,423

2,709

2,316

Interests in associates and joint ventures

12

50,404

15,213

17,916

Venue advances and other loans


3,182

3,249

3,508

Derivative financial instruments

16

120

345

141

Deferred tax asset


1,815

2,406

2,112



___________

___________

___________



176,356

161,446

148,302

Current assets





Trade and other receivables

13

55,117

59,416

50,881

Tax prepayment


671

1,774

3,332

Derivative financial instruments

16

688

286

586

Cash and cash equivalents


27,816

47,276

44,040



___________

___________

___________



84,292

108,752

98,839






Total assets


260,648

270,198

247,141






Current liabilities





Overdraft

15

(19,600)

(17,447)

(17,577)

Trade and other payables

14

(26,006)

(18,772)

(21,202)

Deferred income


(91,401)

(106,468)

(76,806)

Derivative financial instruments

16

(4,458)

(5,434)

(4,840)

Provisions


(272)

(877)

(404)



___________

___________

___________



(141,737)

(148,998)

(120,829)

Non-current liabilities





Bank loan

15

(10,000)

(8,151)

(3,000)

Provisions


(331)

(393)

(421)

Deferred tax liabilities


(10,850)

(12,998)

(11,443)

Derivative financial instruments

16

(1,916)

(6,912)

(2,150)



___________

___________

___________



(23,097)

(28,454)

(17,014)






Total liabilities


(164,834)

(177,452)

(137,843)



___________

___________

___________

Net assets


95,814

92,746

109,298



___________

___________

___________



 



31 March 2014

31 March 2013

30 September 2013



Unaudited

Unaudited

Audited

Equity





Share capital

17

2,497

2,491

2,494

Share premium account


2,946

2,793

2,938

Merger reserve


2,746

2,746

2,746

Capital redemption reserve


457

457

457

ESOT reserve


(4,837)

(4,410)

(3,530)

Retained earnings


118,858

94,297

119,335

Put option reserve


(7,108)

(12,725)

(7,108)

Translation reserve


(24,314)

1,564

(12,120)

Hedge reserve


447

(521)

(433)



___________

___________

___________

Equity attributable to equity holders of the parent


91,692

86,692

104,779

Non-controlling interest


4,122

6,054

4,519



___________

___________

___________

Total equity


95,814

92,746

109,298



___________

___________

___________

 

Condensed Consolidated Cash Flow Statement

For the six months ended 31 March 2014



Six months to 31 March 2014

Six months to 31 March 2013

Year ended 30 September 2013


Notes

Unaudited

Unaudited

Audited



£000

£000

£000

Cash flows from operating activities





Operating profit from continuing operations


11,821

2,634

45,002

Adjustments for non-cash items:





Depreciation and amortisation


6,761

8,134

14,312

Share-based payments


833

984

2,219

Share of profit from associates and joint ventures


(2,594)

(651)

(1,080)

(Decrease) / increase in provisions


(222)

48

(361)

Gain on disposal of property, plant and equipment


59

(21)

(7)

Foreign exchange (gain) / loss on operating activities


(1,670)

(186)

154

Profit on disposal of investments

9

(716)

-

-

Recognition of negative goodwill from bargain purchase

9

(463)

-

-

Fair value of cash flow hedges recognised in the income statement


176

(490)

(1,012)

Operating cash flows before movements in working capital


13,985

10,452

59,227

Increase in receivables


(609)

(10,896)

(5,983)

Venue advances and loans


(105)

(221)

(867)

Utilisation & repayment of venue loans


182

2,720

5,588

Increase in deferred income


15,581

34,396

11,483

Increase/(decrease) in payables


360

3,293

(3,239)

Cash generated from operations


29,394

39,744

66,209

Tax paid


(2,796)

(2,469)

(11,090)

Net cash from operating activities


26,598

37,275

55,119

Investing activities





Interest received


269

546

1,006

Dividends received from associates and joint ventures

12

1,192

420

900

Proceeds from demerger

12

2,482

-

-

Investment in associates and joint ventures

12

(30,419)

(14,381)

(16,098)

Acquisition of businesses - cash paid


(8,604)

(4,938)

(4,936)

Cash acquired on acquisition of business


998

-


Purchase of property, plant and equipment and computer software


(1,376)

(909)

(1,596)

Cash paid to acquire non-controlling interests


-

-

(5,030)

Net cash from investing activities


(35,458)

(19,262)

(25,754)

Financing activities





Dividends paid


(11,567)

(10,704)

(16,351)

Dividends paid to non-controlling interests


(425)

(521)

(1,254)

Interest paid


(533)

(479)

(952)

Proceeds from the issue of share capital & exercise of share options


1,401

331

554

Acquisition of shares for ESOT


(2,751)

-

-

(Repayment) / drawdown of borrowings


9,012

(3,126)

(8,194)

Net cash flows from financing activities


(4,863)

(14,499)

(26,197)

 

 



Six months to 31 March 2014

Six months to 31 March 2013

Year ended 30 September 2013

 



Unaudited

Unaudited

Audited

 



£000

£000

£000

 

Net (decrease) / increase in cash and cash equivalents


(13,723)

3,514

3,168

 

Net cash and cash equivalents at beginning of period


44,040

41,734

41,734

 

Effect of foreign exchange rates


(2,501)

2,028

(862)

 

Net cash and cash equivalents at end of period


27,816

47,276

44,040

 

Cash generated from the business





 

Cash generated from operations


29,394

39,744

66,209

 

Interest received


269

546

1,006

 

Interest paid


(533)

(479)

(952)

 



29,130

39,811

66,263

 

Free cash flow from the business





 

Cash generated from the business


29,130

39,811

66,263

 

Tax paid


(2,796)

(2,469)

(11,090)

 



26,334

37,342

55,173

 

 

 

 

 

Net cash reconciliation

For the six months ended 31 March 2014

 

 

 

At 1 October 2013

Cashflow

Foreign exchange

At 31 March 2014


         £000

£000

£000

£000






Cash

44,040

(13,723)

(2,501)

27,816

Debt due within one year

(17,577)

(2,012)

(11)

(19,600)

Debt due after one year

(3,000)

(7,000)

-

(10,000)


 

 

 

 

Net cash / (debt)

23,463

(22,735)

(2,512)

(1,784)


 

 

 

 

 

The notes on page 16 to 34 form an integral part of the consolidated financial statements.

 

Notes to the Interim Financial Statements

1. General Information and basis of preparation

               

The information for the year ended 30 September 2013 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 2014.  These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2013 except as described below.


The following new standards, amendments to standards and interpretations have been adopted and applied in the period but have had no material impact on the 2014 Group interim statements:

 

Revised version of IAS 19 - Employee Benefits

IAS 27 - Separate Financial Statements (2011)

IAS 28 - Investments in Associates and Joint Ventures (2011)

IFRS 10 - Consolidated Financial Statements

IFRS 11 - Joint Arrangements

IFRS 12 - Disclosure of Interests in Other Entities

IFRS 13 - Fair Value Measurement

Amendments to IFRS 7 and IAS 32 - Offsetting financial assets and financial liabilities

Amendments to IFRS 1 - Government Loans

 

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;

 

IFRS 9 - Financial Instruments

Amendments to IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets

Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting

 

 

2. Segmental information

IFRS 8 introduced the term Chief Operating Decision Maker (CODM). The Senior Management Board is considered to be the CODM and consists of Neil Jones (Financial Director), Stephen Keen, Suzanne King, Baris Onay, Nik Rudge, Alexander Shtalenkov, Russell Taylor (Chief Executive Officer) and Colette Tebbutt.

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 headline profit or loss from operations before tax expense.

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

 

Six months ended 31 March 2014

Unaudited

Russia

Central Asia & Caucasus

Eastern & Southern Europe

UK & Western Europe

Asia

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

42,268

12,488

7,855

5,920

2,626

71,157

Headline pre-tax profit

14,375

3,891

481

(3,134)

2,600

18,213

Operating profit

11,787

3,758

(2,682)

(1,739)

697

11,821


________

________

________

________

________

_______

By origin of sale







Revenue

31,213

7,083

6,287

24,022

2,552

71,157

Headline pre-tax profit

9,927

1,275

(607)

4,363

3,255

18,213

Operating profit

7,340

1,143

(3,770)

5,759

1,349

11,821


_______

________

________

_______

________

_______

Operating profit






11,821

Investment revenue






1,231

Finance costs






(838)







_______

Profit before tax






12,214

Tax






(1,663)







_______

Profit after tax






10,551







________

Capital expenditure

462

69

82

717

46

1,376

Depreciation and amortisation

2,690

264

2,695

530

582

6,761

Balance Sheet







Assets *

70,343

21,355

58,156

42,914

65,394

258,162


________

________

________

________

________

________








Liabilities *

(41,806)

(10,600)

(14,287)

(83,710)

(3,097)

(153,500)


________

________

________

________

________

_______

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

The revenue in the period of £71.2 million includes £0.3 million of barter sales.

Included within the headline pre-tax profit and operating profit of UK & Western Europe is £5.3 million and £5.0 million respectively of corporate costs.

 

2. Segmental information (continued)

 

Six months ended 31 March 2013

Unaudited

Russia

Central Asia & Caucasus

Eastern & Southern Europe

UK & Western Europe

Asia

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

40,019

11,472

12,315

5,055

585

69,446

Headline pre-tax profit

11,298

2,647

1,841

(3,311)

(1,342)

11,133

Operating profit

7,366

2,584

(1,392)

(3,074)

(2,850)

2,634


________

________

________

________

________

_______

By origin of sale







Revenue

31,261

6,322

9,723

21,685

455

69,446

Headline pre-tax profit

6,851

1,102

546

2,543

91

11,133

Operating profit

2,919

1,039

(2,687)

2,779

(1,416)

2,634


_______

________

________

_______

________

_______

Operating profit






2,634

Investment revenue






764

Finance costs






(759)







_______

Profit before tax






2,639

Tax






(548)







_______

Profit after tax






2,091







________

Capital expenditure

462

221

74

285

25

1,067

Depreciation and amortisation

3,883

179

2,862

544

666

8,134

Balance Sheet







Assets *

107,517

20,320

60,013

46,941

31,227

266,018


________

________

________

________

________

________








Liabilities *

(60,961)

(9,289)

(14,982)

(74,588)

(2,664)

(162,484)


________

________

________

________

________

_______

 

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

The revenue in the period of £69.4 million includes £0.2 million of barter sales.

Included within the headline pre-tax profit and operating profit of UK & Western Europe is £5.6 million and £5.2 million respectively of corporate costs.

The amortisation charge for the six months ended 31 March 2013 have been reallocated from UK & Western Europe to the segments to which the intangible assets relate.  Eliminations of intragroup revenues have also been reallocated between segments.

 

2. Segmental information (continued)

 

Year ended 30 September 2013

Audited

Russia

Central Asia & Caucasus

Eastern & Southern Europe

UK & Western Europe

Asia

Total Group


£000

£000

£000

£000

£000

£000

By geographical location of events/activities







Revenue

121,138

28,836

28,930

9,696

3,661

192,261

Headline pre-tax profit

48,367

10,375

8,662

(8,557)

518

59,365

Operating profit

41,639

10,260

2,691

(8,247)

(1,341)

45,002


________

________

________

________

________

_______

By origin of sale







Revenue

86,302

16,464

23,607

62,455

3,433

192,261

Headline pre-tax profit

32,372

5,548

6,909

12,384

2,152

59,365

Operating profit

25,643

5,433

939

12,694

293

45,002


________

________

________

________

________

_______

Operating profit






45,002

Investment revenue






1,063

Finance costs






(2,171)







 

Profit before tax






43,894

Tax






(8,223)







 

Profit after tax






35,671







 

Capital expenditure

286

176

52

394

13

921

Depreciation and amortisation

6,957

328

5,356

691

980

14,312

Balance Sheet







Assets *

88,308

15,735

50,741

54,812

32,102

241,698


________

________

________

________

________

________

Liabilities *

(43,899)

(6,865)

(13,040)

(57,790)

(2,251)

(123,845)


________

________

________

________

________

_______

 

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

The revenue in the period of £192.3 million includes £0.7 million of barter sales.

Included within the headline pre-tax profit and operating profit of UK & Western Europe is £11.6 million and £11.0 million respectively of corporate costs.

 

3. Investment revenue


Six months to 31 March 2014

Six months to 31 March 2013

Year ended 30 September 2013


Unaudited

Unaudited

Audited


£000

£000

£000





Interest receivable from bank deposits

269

546

1,006

Gain on revaluation of put options

350

161

-

Gain on cashflow hedges

-

57

57

Gain on revaluation of contingent consideration

612

-

-


__________

__________

__________


1,231

764

1,063


__________

__________

__________

 

 

4. Finance costs


Six months to 31 March 2014

Six months to 31 March 2013

Year ended 30 September 2013


Unaudited

Unaudited

Audited


£000

£000

£000





Interest on bank loans and overdrafts

299

243

479

Bank charges

234

236

473

Loss on contingent consideration

-

31

75

Loss on revaluation of put options

188

-

825

Loss on cashflow hedges

17

16

38

Imputed interest charge on discounted put option liabilities

100

233

281


_________

__________

__________


838

759

2,171


__________

__________

__________

 

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

 



Six months to
31 March 2014

Six months to
31 March 2013

Year ended 30 September 2013


Unaudited

Unaudited

Audited


£000

£000

£000





Profit on ordinary activities before taxation

12,214

2,639

43,894

Operating items




Amortisation of acquired intangibles

6,070

7,350

13,116

Tax on income from associates and joint ventures

815

79

105

Transaction costs (completed and pending)

967

962

1,178

Exceptional income

-

-

(109)

Profit on disposal of investments (note 9)

(716)

-

-

Recognition of negative goodwill from bargain purchase (note 9)

(463)

-

-

Financing items




(Gain) / loss on revaluation of put options

(162)

(161)

825

(Gain) / loss on contingent consideration

(612)

31

75

Imputed interest charge on discounted put option liabilities

100

233

281


 

 

 

Headline pre-tax profit

18,213

11,133

59,365


__________

__________

__________

 

6.   Taxation


Six months to
31 March 2014

Six months to
31 March 2013

Year ended 30 September 2013


Unaudited

Unaudited

Audited






£000

£000

£000

Current tax




     UK corporation tax

873

62

101

     Foreign tax

2,367

2,373

10,775


__________

__________

__________


3,240

2,435

10,876

Deferred tax

(1,577)

(1,887)

(2,653)


__________

__________

__________

Tax on profit on ordinary activities

1,663

548

8,223


__________

__________

__________

 

Tax at the interim is charged on pre-tax profits, including those of associates and joint ventures, at a rate of 19% (2013: 20%) representing the best estimate of the weighted average annual corporation tax expected for the financial year adjusted for discrete items in the interim period.

 

 

7. Dividends

 


Six months to
31 March 2014

Six months to 31 March 2013

Year ended 30 September 2013


Unaudited

Unaudited

Audited


£000

£000

£000

Final dividend for the year ended 30 September 2013

of 4.7p (2012: 4.4p) per ordinary share

11,581

10,717

 

10,717


__________

__________

__________





Interim dividend for the year ended 30 September 2013 of 2.1p per ordinary share

-

-

5,644





Proposed interim dividend for the year ending
30 September 2014 of 2.5p (2013: 2.3p)  per ordinary share

6,160

5,625

-


__________

__________

__________

 

The proposed interim dividend was approved by the Board on 14 May 2014 and has not been included as a liability as at 31 March 2014.

8. Earnings per share

The calculations of basic and diluted earnings per share are based on the profit for the financial year attributable to equity holders of the parent of £10.5 million (31 March 2013: £2.2 million; 30 September 2013: £34.7 million).

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 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 and deferred & contingent consideration, imputed interest charges on put option liabilities and direct costs relating to completed and pending acquisitions and disposals, as shown in the table below:


Six months

to 31 March

2014

Unaudited

Six months

to 31 March

2013

Unaudited

Year ended 30 September 2013

Audited


£000

£000

£000





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

10,523

2,212

34,665

Amortisation of acquired intangibles

6,070

7,350

13,116

Tax effect of amortisation

(1,153)

(1,470)

(2,457)

Transaction  costs

967

962

1,178

Exceptional income

-

-

(109)

(Gain) / loss on revaluation of put options

(162)

(161)

825

(Profit) on disposal of investments (note 9)

(716)

-

-

Recognition of negative goodwill from bargain purchase (note 9)

(463)

-

-

(Gain) / loss on contingent consideration

(612)

31

75

Imputed interest charge on discounted put option liabilities

100

233

281

Tax effect of other adjustments

224

-

-


________

________

________


14,778

9,157

47,574


________

________

________

 

The number of shares used in the calculation of earnings per share is presented below:

 

 


Six months to

31 March 2014

Six months to

31 March 2013

Year ended 30 September 2013



Number of shares ('000)

Unaudited

Number of shares ('000)

Unaudited

Number of shares ('000)

Audited

Weighted average number of shares:





For basic earnings per share


246,358

243,619

244,378

Dilutive effect of exercise of share options


440

4,080

2,647



___________

___________

___________

For diluted earnings per share


246,798

 

247,699

247,025



 

 

 

 

 

 

9. Acquisition of businesses

Beauty Eurasia

On 10 October 2013, E Uluslararası Fuar Tanıtım Hizmetleri A.Ş, the Group's wholly owned Turkish subsidiary, acquired 100% of the shares of Platform Exhibitions Inc, a company incorporated in Turkey, for cash consideration of £8.4m, of which £2.7m is deferred.

The acquired business organises the Beauty Eurasia exhibition which takes place in June and serves the beauty and cosmetics industries in Turkey.  As such the acquisition of this company is consistent with ITE's strategy of expanding into new sectors in existing markets, and enhances ITE's presence in the beauty sector.

The Group incurred transaction costs of £0.4m in relation to this acquisition, which are included in administrative expenses.

Details of the fair values of the net assets acquired, and the attributable goodwill, are presented as follows:

Assets acquired



Fair value
£000

Intangible fixed assets - Trademarks



570

Intangible fixed assets - Customer relationships



3,610

Cash



160

Deferred tax liability



(836)

Other current assets



347

Other current liabilities



(386)




___________

Net assets acquired



3,465




___________

Goodwill arising on acquisition



4,944




___________

Total cost of acquisition




Satisfied by net cash paid



5,690

Contingent consideration



2,719




___________




8,409




___________

 

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 of £4.9 million represents the perceived value placed by the Group on synergies expected across its beauty portfolio and within the existing Turkish business.

The cost of the acquisition includes £2.7 million of consideration which is contingent upon the results of the business for the year ended 30 June 2014.

The acquired business has contributed £nil revenue and £0.1m of costs to Group results since acquisition.  If the acquisition had occurred on 1 October 2013 the contribution of the acquired business to group results would be unchanged. 

 

Scoop

On 1 December 2013, the Group exercised its call option to acquire the 60% of Scoop International Fashion Limited which it did not already own.

The acquired business organises Scoop, a high end womenswear fashion exhibition in the UK.  The acquisition is expected to strengthen the Group's position in the UK fashion sector.

Disposal of investment

In order to recognise and fully consolidate the assets and liabilities of the Scoop subsidiary, first the Group derecognised its existing 40% investment in Scoop previously recorded within Investments in Associates and Joint Ventures.  This resulted in a gain of £1.0m which represents the difference between the fair value of £1.2 million and book value of £0.2 million of the existing holding.  This gain is recognised within administrative expenses.

Acquisition of subsidiary

Details of the fair values of the net assets acquired, and the attributable goodwill, are presented as follows:

Assets acquired



Fair value
£000

Property, plant & equipment



63

Intangible fixed assets - Trademarks



965

Intangible fixed assets - Customer relationships



1,229

Cash



408

Deferred tax liability



(477)

Other current assets



412

Other current liabilities



(1,039)




___________

Net assets acquired



1,561




___________

Goodwill arising on acquisition



1,422




___________

Total cost of acquisition




Satisfied by net cash paid



1,790

Fair value of previously held interest



1,193




___________




2,983




___________

 

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 of £1.4m reflects expected synergies with the Group's existing UK fashion business.

The acquired business has contributed £1.0m to Group revenue and £0.4m to profit since acquisition.  If the acquisition had occurred on 1 October 2013 the contribution of the acquired business to group results would be unchanged. 

 

Summit

On 3 February 2014, the Group's put option to acquire the 90% of Summit Trade Events Limited which it did not already own was exercised.

The acquired business organises a number of conferences in the Oil & Gas sector in Turkmenistan.  As such the acquisition of this company is consistent with ITE's strategy of expanding into existing sectors in new markets.

Disposal of investment

In order to recognise and fully consolidate the assets and liabilities of the Summit subsidiary, first the Group derecognised its existing 10% investment in Summit previously recorded within Investments in Associates and Joint Ventures.  This resulted in a loss of £0.3 million which represents the difference between the fair value of £0.2 million and book value of £0.5 million of the existing holding.  This loss is recognised within administrative expenses.

Acquisition of subsidiary

Details of the fair values of the net assets acquired, and the attributable goodwill, are presented as follows:

Assets acquired



Fair value
£000

Intangible fixed assets - Trademarks



339

Intangible fixed assets - Customer relationships



1,718

Cash



430

Deferred tax liability



(453)

Other current assets



89

Other current liabilities



(66)




___________

Net assets acquired



2,057




___________

Recognition of negative goodwill from bargain purchase



(463)




___________

Total cost of acquisition




Satisfied by net cash paid



1,124

Contingent consideration



311

Fair value of previously held interest



159




___________




1,594




___________

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.

The gain on bargain purchase, which is included within administrative expenses, results from the terms of the put and call options contained in the contractual arrangements.

The cost of the acquisition includes £0.3 million of consideration which is contingent upon the results of the business for the year ended 31 December 2015.

The acquired business has contributed £nil to Group revenue and profit since acquisition.  If the acquisition had occurred on 1 October 2013 the acquired business would have contributed £1.0 million to Group revenue and an additional £0.2 million to Group profit. 

10.  Goodwill




2014
£000

At 1 October 2013



78,575

Additions in the period



6,366

Exchange differences



(8,616)




_________

At 31 March 2014



76,325




_________

 

11.  Other intangible assets

 




2014
£000

At 1 October 2013



43,734

Additions through business combinations



8,431

Additions



671

Amortisation of acquired intangibles



(6,070)

Amortisation of computer software



(288)

Exchange differences



(4,391)




_________

At 31 March 2014



42,087




_________

 

12. Interests in associates and joint ventures

 


Total


£000



At 1 October 2013

17,916

Additions

34,209

Share of results of associates and joint ventures

2,594

Dividends received

(1,192)

Proceeds from demerger

(2,482)

Deemed disposal of investments in Scoop & Summit

(592)

Foreign exchange

(49)


 

At 31 March 2014

50,404


 

 

On 14 November 2013, ITE's wholly owned subsidiary, ITE Overseas Ltd, established a 50:50 joint venture, Sinostar ITE, with Hong Kong based Worldcoat Exhibitions Ltd, for an investment of £34 million, of which £4 million is deferred and contingent upon the results of the business for the year ended 31 March 2014.  As part of the transaction, Sinostar ITE acquired the ChinaCoat exhibition from Sinostar International Ltd.  ChinaCoat is the leading coatings and finishings exhibition in China and South East Asia.  As such the acquisition of this joint venture is consistent with ITE's strategy of expanding into new high growth markets.

 

12. Interests in associates and joint ventures (continued)

 

The Group incurred transaction costs of £0.4m in relation to the acquisition of Sinostar ITE, which are included in administrative expenses.  A dividend will be paid by the joint venture once the profits for the year ended 31 March 2014 have been audited.

 

During the year ABEC, one of the Group's associates, demerged a property-owning entity from their business resulting in the receipt of proceeds from the demerger of £2.5 million.

 

As explained in note 9, on acquisition of controlling equity stakes in Scoop and Summit it is necessary to deem the investments in these associates a disposal as part of the acquisition accounting process to fully recognise the assets and liabilities of the subsidiary.

 

13.  Trade and other receivables


31 March

2014

Unaudited

31 March

2013

Unaudited

30 September 2013

Audited


£000

£000

£000





Trade receivables

29,263

32,968

37,237

Other receivables

2,999

3,267

3,364

Venue advances and prepayments

605

3,176

555

Prepayments and accrued income

22,250

20,005

9,725


___________

___________

___________


55,117

59,416

50,881


___________

___________

___________

Prepayments and accrued income includes £3.4 million (31 March 13: £nil, 30 September 13: £1.2 million) of non-current show prepayments.

14.  Trade and other payables


31 March

2014

Unaudited

31 March

2013

Unaudited

30 September 2013

Audited


£000

£000

£000





Trade payables

1,948

731

260

Taxation and social security

1,489

5,617

4,721

Other payables

3,450

2,904

2,528

Accruals

8,791

8,716

9,573

Deferred consideration

145

293

3,790

Contingent consideration

10,183

511

330


___________

___________

___________


26,006

18,772

21,202


___________

___________

___________

 

15.  Bank loan and overdraft



31 March 2014

Unaudited


31 March 2013

Unaudited

30 September 2013

Audited


£000

£000

£000





Current liabilities




Bank overdraft

19,600

17,447

17,577


___________

___________

___________


19,600

17,447

17,577


___________

___________

___________

Non-current liabilities




Bank loan

10,000

8,151

3,000


___________

___________

___________


10,000

8,151

3,000


___________

___________

___________

 

The bank overdraft is repayable on demand. The overdraft is denominated in Sterling, Euros and US Dollars. The overdraft is taken out to act as a partial hedge against the UK monetary assets in those currencies.  At 31 March 2014 the Group had £0.4 million (March 2013: £2.6 million) of undrawn committed overdraft facilities.  The bank loan is a £10.0 million multi-currency committed bank facility that provides revolving credit facilities through to 1 July 2015.  At 31 March 2014 the Group had £nil (March 2013: £1.8 million) of undrawn committed loan facility. 

 

All borrowings are arranged at floating interest rates, thus exposing the Group to interest rate risk.  All borrowings are secured by a guarantee between a number of Group companies.

 

16. Derivative financial instruments

 

Derivative financial instruments are classified according to the following categories in the table below.  The Group's derivative financial instruments are categorised into levels to reflect the degree to which observable inputs are used for determining their fair value.  All instruments at 31 March 2014 are classified as Level 2, which means that fair value is determined using inputs, other than quoted prices in active markets for identical assets or liabilities, that are observable for the asset or liability either directly or indirectly.

 


31 March 2014

Unaudited


31 March 2013

Unaudited

30 September

2013

Audited


£000

£000

£000

Current assets




Foreign currency forward contracts

688

286

534

Equity option assets

-

-

52


___________

___________

___________


688

286

586


___________

___________

___________

Non-current assets




Foreign currency forward contracts

120

293

141

Equity option assets

-

52

-


___________

___________

___________


120

345

141


___________

___________

___________

 


31 March 2014

Unaudited


31 March 2013

Unaudited

30 September 2013

Audited


£000

£000

£000

Current liabilities




Foreign currency forward contracts

214

364

345

Put options

4,244

5,070

4,495


___________

___________

___________


4,458

5,434

4,840


___________

___________

___________

Non-current liabilities




Foreign currency forward contracts

315

1,211

738

Put options

1,601

5,701

1,412


___________

___________

___________


1,916

6,912

2,150


___________

___________

___________

The notional amounts outstanding under derivative instruments as at each reporting date are as follows:

Derivative assets


31 March 2014

Unaudited


31 March 2013

Unaudited

 30 September 2013

Audited


£000

£000

£000





Foreign currency forward contracts

38,636

29,941

21,901

Equity option assets

-

781

1,038


___________

___________

___________


38,636

30,722

22,939


___________

___________

___________

 

 




16. Derivative financial instruments (continued)

 

Derivative liabilities

 


31 March 2014

Unaudited

31 March 2013

Unaudited

30 September 2013


£000

£000

Audited

£000





Foreign currency forward contracts

29,215

50,845

39,614

Put option liabilities

62,004

10,771

64,761


___________

___________

___________


91,219

61,616

104,375


___________

___________

___________

 

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. 

The foreign currency forward contracts as at 31 March 2014 cover exchange exposures over the next 36 months, with €62.2 million covering exposures after September 2014.   These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity.

At 31 March 2014, the fair value of these derivatives is estimated to be a net asset of approximately £0.3 million (31 March 2013: liability of £1.0 million; 30 September 2013: liability of £0.4 million). This is based on market valuations.  This amount has been deferred in equity at 31 March 2014.

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.

 


31 March 2014

Unaudited

31 March 2013

Unaudited

30 September 2013

Audited


£000

£000

£000





Put options on subsidiaries




Yem Fuar

4,244

9,556

4,495

Tradelink

1,601

1,215

1,412





Put options on associates & joint ventures




ABEC

-

-

-

ECMI

-

-

-





Put options exercised in the period




Summit Trade Events Limited

-

-

-

Scoop

-

-

-


___________

___________

___________


5,845

10,771

5,907


___________

___________

___________









 

17. Share capital

 


31 March 2014

Unaudited

31 March 2013

Unaudited

30 September 2013


£000

£000

Audited

£000

Authorised




375,000,000 ordinary shares of 1 penny each

(31 March 2013: 375,000,000)            

3,750

3,750

3,750


__________

__________

__________

Allotted and fully-paid




249,720,524 ordinary shares of 1 penny each

(31 March 2013: 249,115,024)

2,497

2,491

2,494


__________

__________

__________

 

During the period, the Company allotted 348,000 (2013: 251,617) ordinary shares of 1 penny each pursuant to the exercise of share options. The total consideration for the shares issued was £11,930 (2013: £2,516).

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

 

18. Events after the balance sheet date

On 5 May 2014 the Group exercised its call option to acquire an additional 20% of Yem Fuar for consideration of TRY 15.5 million (£4.2 million), taking its total stake to 100%.

19. 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 2014.

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 for the six month period to 31 March 2014, is a significant shareholder of Datacom and Saban Holdings.  In total, the services charged to ITECA were £33,500 (31 March 2013: £30,000, 30 September 2013: £61,000). 

In St Petersburg, Primexpo, a Group subsidiary, has transacted with Cavalry House for the provision of office rental. Edward Strachan, a Group Director for the six month period to 31 March 2014, is a significant shareholder of Cavalry House. In total, the services charged to Primexpo were £99,600 (31 March 2013: £102,000, 30 September 2013: £206,000). 

During the period ended 31 March 2014 consultancy fees of £108,750 (31 March 2013: £70,000, 30 September 2013: £215,000) were paid to Kyzyl Tan Eurasian Advisors Limited ("Kyzyl Tan") of which Edward Strachan is a significant shareholder.  These payments were made under a contract for Kyzyl Tan to provide the services of Edward Strachan to the Group.

The Group holds a 40% stake in Lentewenc, a company incorporated in Poland. Edward Strachan is a significant shareholder of Lentewenc. The Group provided non refundable funding of £140,000 to Lentewenc during the six month period to 31 March 2014 (31 March 2013: nil, 30 September 2013: nil).

 

 20.         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, the CIS, Turkey and Asia.  Recent political troubles in Ukraine have impacted the performance of the Group's business in Ukraine, but throughout the period the Group has continued to run its events which are all based on Kiev.  The diversity of businesses across sectors and geography provides protection for the longer-term prospects of the Group.

In addition, 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, CIS, Turkish or Asian companies fully contributing to the local economy.

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 Group's performance during the recent recession.

Going concernThe 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.

 

20.          Principal risks and uncertainties (continued)

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.

 

Integration and management of acquisitions

With new acquisitions there can be no assurances that the Group will achieve the expected return on its investment, particularly as the success of any acquisition also depends on the Group's ability to integrate the acquired business or assets.  The Group has formal investment decision criteria to identify suitable, earnings enhancing, acquisitions targets and employs experienced professionals to drive the acquisition process and performs, when appropriate, financial, tax, legal and commercial due diligence.  Post-acquisition plans are prepared to ensure businesses are effectively integrated into the Group and that planned synergies are realised.

 

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.

 

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. At 31 March 2014, the Group had a cash balance of £27.8 million and there was headroom of £0.4 million on the Group's borrowing facilities.

 

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

 

16 May 2014

 

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 2014 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 20. 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 2014 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

16 May 2014

 

 

 

 

Directors and professional advisers

 


Directors

Marco Sodi, non-executive Chairman

Russell Taylor, Chief Executive Officer
Neil Jones, Group Finance Director

Neil England, non-executive Director

Linda Jensen, non-executive Director

Stephen Puckett, non-executive Director

Sharon Baylay, non-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

FTI Consulting

200 Aldersgate

Aldersgate Street

London, EC1A 4HD

 

Website

www.ite-exhibitions.com

 

 

 

 

 

Financial calendar

Interim dividend

Ex dividend date                                                                                 2 July 2014

Record date                                                                                         4 July 2014

Payment date                                                                                      7 August 2014

 

Final dividend

Ex dividend date                                                                                 7 January 2015

Record date                                                                                         9 January 2015

Payment date                                                                                      9 February 2015

 

 


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