Final Results

ITE Group PLC 07 December 2004 ITE GROUP PLC PRELIMINARY RESULTS ANNOUNCEMENT 7 December 2004 ITE Group plc, the leading exhibition organiser in emerging markets, is pleased to announce its preliminary results for the year ended 30 September 2004. Key points: - Record results - Profit before tax of £15.7 million (2003: £12.3 million), up 28% - Headline pre-tax profit* of £18.1 million (2003: £15.5 million), up 17% - Dividend per share of 2.2p (2003: 1.6p), up 38% - Net cash of £33.5 million (2003: £22.1 million), up 52% - Diluted earnings per share of 3.8p (2003: 3.0p), up 27% - Headline diluted earnings per share of 4.7p (2003: 4.2p), up 12% - Strong growth in core markets, with 'like for like' increase of 11% in sales - 30 new launches in the year Commenting on the results, Iain Paterson, Chairman, said: 'I am very pleased to report record full-year results for ITE Group plc. These reflect an excellent performance in all of our key markets with Headline profit before tax up 17% to £18.1 million. These results are even more pleasing as in this year of our biennial cycle two of our largest shows do not take place. The Group's balance sheet remains strong with net cash of £33.5 million. 'The markets in which the Group operates are enjoying rapid growth and our strong market position, particularly in Russia and the CIS, positions us well for future growth. During the year we made a number of strategic acquisitions to complement our core businesses and we continue to extend and strengthen relationships with key venues. We believe that the Group is well placed to continue the strong performance next year and I am pleased to announce a substantial increase in the dividend from 1.6p per share to 2.2p per share to bring it in line with the Company's new platform of profitability.' * Headline pre-tax profit is defined as profit before tax, amortisation and impairment of goodwill (including associates) and profits or losses arising on disposal of group undertakings - see the Profit and Loss Account for details Enquiries: Ian Tomkins ITE Group plc 020 7596 5000 Bridget Fury Merlin 020 7653 6620 ITE Group plc Preliminary statement for the year ended 30 September 2004 Chairman's Statement Group Performance I am pleased to be announcing record results for ITE Group plc. These results reflect the underlying strength of the business and an excellent performance in all of our key markets. This was achieved despite the impact on the results of ITE's biennial cycle. Turnover and Headline profit before tax for 2004 were £60.8 million (2003: £58.9 million) and £18.1 million (2003: £15.5 million) respectively. Headline diluted earnings per share grew by 12% to 4.7p per share and diluted earnings per share improved to 3.8p per share (2003: 3.0p per share). Profit before tax of £15.7 million is a 28% improvement on last year's Profit before tax of £12.3 million. The Group has a strong balance sheet and finished the year with net assets of £44.4 million (2003: £38.6 million) and a net cash balance of £33.5 million (2003: £22.1 million). Strategic Progress In addition to our strong core business performance we have made a number of strategic and complementary acquisitions. Most recently in October 2004 we acquired Caspian Events Limited which owns the Caspian Oil and Gas exhibition taking place every year in Azerbaijan. In May we acquired two exhibitions in the Ukraine which have helped to build our presence in this growing market. In June we completed the acquisition of RAS Publishing Group which owns the publishing titles complementary to MODA, our UK Fashion brand. These acquisitions all reflect our strategy of building the business through acquisitions in regions or sectors where we already have relevant knowledge and experience. We have made more progress in disposing of businesses where there is little scope for management to achieve reasonable returns or improve performance. Further to the disposal of our Czech associate interest in November 2003, we sold our 50% shareholding in ACG our Egyptian associate company in May this year. In October 2004 we disposed of X-RM Limited, a small UK based software Company. We have made further progress in extending and strengthening our key relationships with the venues that host our exhibitions business. ITE has been instrumental in supporting the construction projects for new facilities in Almaty (Kazakhstan), Kyiv (Ukraine) and St Petersburg (Russia). The expansion in international quality exhibition facilities will provide more space for our exhibition organising business to continue its growth. Board and Management There have been no changes to the main Board since we last reported to you. Michael Hartley who joined the Board in October 2003 was appointed Chairman of the Remuneration Committee in February of this year. The Board has made some changes to bring its structure and practices more closely into line with the requirements of the New Combined Code. In particular Marco Sodi and Christopher Russell, the two appointees of Veronis Suhler Stevenson have now agreed to stand for re-election in accordance with normal practice. The stability of the Board has assisted the Group in developing its management team and I am encouraged at the level of talent that is apparent throughout our local offices. I should like, on behalf of the Board, to reflect our appreciation for all the efforts of our staff that have helped to make 2004 such a rewarding year. Dividend Over the last 2 years the organisation and cost base of the Group has been restructured. As the benefits of this are now reflected in this year's financial performance, the Board has re-evaluated the Company's dividend policy and has decided to re-base the dividend by recommending a final dividend of 1.65p per share. The total dividend for the year of 2.2p per share represents a 38% increase over last year's dividend of 1.6p per share. The Group intends to increase future dividends to reflect underlying financial performance. Outlook The regions in which the Group operates are experiencing strong growth and the venue space which facilitates expansion of our business is increasing in our significant markets. We believe that ITE is well positioned to take advantage of the anticipated expansion in the exhibition business in developing and emerging markets. With our strong and established positions we remain confident that we can build on the good financial performance of this year. Iain Paterson Chairman 7 December 2004 Chief Executive's Review Financial performance Turnover for the year was £60.8 million (2003; £58.9 million) and Operating profits were £13.8 million (2003: £11.7 million). The increase in Turnover and Operating Profits of 3% and 17% respectively has been earned in the weaker year of our biennial cycle. On a like for like basis (i.e. after adjustment for the effect of our biennial cycle) revenues for 2004 increased by 11% and Operating profit by 49% relative to the 2003 performance. Sales of exhibition metres for the year were 276,000 (2003: 292,000) at an average Sterling yield of £220 per m2 (2003: £202 per m2). Overall our Sterling yields have increased in Moscow where contracts are priced in Euros although there has been some deterioration in other regions where contracts have been priced in US dollars. Yields have also improved as a result of better pricing and discount controls throughout the Group. Operating profit of £13.8 million for 2004 is an improvement of £2.1 million over last year's comparable figure of £11.7 million. The change consists of a £0.5 million improvement in Gross profit and a £1.6 million reduction in Operating expenses. The improved Gross profit figure has been derived from higher sales made at a consistent 45% gross margin. Operating expenses of £13.4 million (2003: £15.1 million) reflect the benefits of a lower cost base following last year's re-structuring exercise and a net reduction in non recurring items of £0.8 million. Net operating expenses before amortisation of goodwill were £10.9 million (2003 £12.7 million) and now reflect a revised ongoing cost base for the Group at its current level of operation. Foreign exchange losses of £0.4 million (2003 losses of £0.4 million) are included in Net operating expenses. Our associated company contribution relates solely to our 50% owned business, ITF in Istanbul, Turkey. Revenues and volume sales were both 15% lower than in 2003 on account of calendar changes for two significant events - which were re-scheduled into 2005. Despite this the Group's share of ITF's Operating profits contributed £0.5 million. Trading highlights In 2004 ITE organised 141 events in 15 countries (2003: 114 events in 16 countries). We launched 30 new events over the course of the year across a range of industries concentrating on our core markets of Kazakhstan, Ukraine and Moscow. The top ten events ordered by contribution to gross profit in 2004 and their change in size over 2003 are set out below: Rank Event Location 2004 2003 m2 sold m2 sold Growth --------- --------- ------ 1 Mosbuild Moscow 35,700 34,600 3% 2 Moscow International Travel & Moscow 16,700 17,500 * Tourism (MITT) 3 World Food Moscow Moscow 20,000 17,500 14% 4 Moscow International Motor Show Moscow 16,600 22,800 * / Autosalon 5 MODA UK (bi-annual) U.K. 21,000 19,000 11% 6 Kazakhstan International Oil & Kazakhstan 6,200 5,600 11% Gas (inc. conference) 7 Windows & Doors Moscow 8,900 8,600 3% 8 Baltic Building Week St Petersburg 9,900 9,000 10% 9 Moscow International Sports & Moscow 9,900 7,500 32% Boat Show** 10 Ingredients Russia Moscow 4,700 4,500 4% * 2003 Events not directly comparable ** Now split into two separate events Like for like growth in space sales of our top ten annual events was 7%. This reflects the constraint of venue space with respect to our major events, Mosbuild, Windows and Doors and Moscow International Travel and Tourism. World Food Moscow and the Moscow Boat Show procured additional space to facilitate strong performances. In Moscow volume growth was lower but tighter pricing and the Euro denomination of its sales supported an improved average Sterling yield. Volume growth was stronger in Central Asia but yields suffered from being priced in US dollars. New launches contributed 12,000m2 in volume sales, revenues of £2.4 million and gross profits of £0.5 million. Profits earned from Oil and Gas and the Motor sectors events are proportionately smaller, as is normal in the weaker year of our biennial cycle when we do not hold the Oil and Gas event in Moscow and the Moscow International Motor Show (MIMS) runs in place of Autosalon event. The strength of Construction Events throughout Russia and CIS is apparent, as are the improved profits from the travel sector driven by the events in Moscow and Ukraine. Review of Operations Russia Despite lower overall volumes sold (see below) revenues were supported by better yields and gross profits earned in Russia rose by 3%. In 2004 the biennial Moscow International Oil & Gas was not scheduled, and the smaller version of the two Motor events, MIMS took place instead of Autosalon. This biennial effect accounted for a 17,000m2 reduction in volume sales. In response to a change in the international calendar of events it has been decided Autosalon will now be scheduled in 'even years' commencing in 2006, with MIMS alternating in the 'odd years'. A notable success in Moscow this year was the decision to split the Sports and Boats show into two separate events which enabled the Boat show to expand by 35%. We have undertaken infrastructure works with the venue to further enhance this event. World Food Moscow benefited both from additional space being made available and an improvement in yield, to increase its revenues by 28%. The Moscow office launched 6 new events into new market niches for technology and infrastructure. A significant influence on the performance of a number of our major exhibitions is the availability of quality exhibition space. This year has heralded the opening of a new 30,000m2 gross facility, Crocus, in Moscow. Our Mosbuild construction event is scheduled to expand into this facility in 2005 allowing new space for potential growth. We note that Crocus has also started construction of Phase 2 which will increase its overall space available by a further 60,000m2 gross which will facilitate further anticipated growth of our leading event. The St Petersburg office has seen strong growth in volume sales and gross margins of approximately 20% on a like for like basis. Two new launches were successful in addition to 10% growth in size of the office's largest and most profitable event, Baltic Building Week. ITE has advanced a further loan of $2.1 million to the venue owners, Lenexpo, to part finance a construction project on their exhibition grounds. The loan will be recouped by offsetting future venue charges otherwise payable. Central Asia ITE's offices in these regions achieved dynamic growth with 15 new events - adding 5,100 metres of sales - in addition to the strong performance from existing events. A new office has been established in Tbilisi, Georgia. New events have also been launched in Kyrgystan and Tajikistan. In total the Central Asia & Caucasus region now accounts for 15% of the Group's Revenues and 13% of Gross profits. The most significant contributions were in the Oil and Gas and the Construction sectors. The Central Asian offices currently run 7 construction exhibitions in Almaty, Astana, Atyrau, Baku, Tashkent, Tbilisi and Bishkek and together they increased their sales by over 40% from circa 10,000m2 to over 14,000m2. Kazakhstan International Oil and Gas Exhibition and its Conference (KIOGE) improved its profits by 16% over last year - largely on the basis of an increase in the size of the exhibition facilitated by the newly constructed pavilion at Almaty, funded by ITE. As reported at the interim stage ITE has made an additional loan of $1.2 million to support the construction of improved facilities at the Almaty exhibition venue. The acquisition of the Caspian Oil and Gas Exhibition and Conference in October 2004 complements our portfolio of Oil and Gas events throughout the CIS. This annual event, held in Baku, is one of the pre-eminent Oil and Gas events in the region and the integration into our local office infrastructure and the ITE international sales network has been initiated. Eastern & Southern Europe The Kyiv office in Ukraine completed a successful year increasing its total volume of sales by 50% to 20,000 metres. This was achieved through 5 new launches and strong growth in its 3 core events - Food, Construction and Travel where collectively volume sales and profitability increased by 40%. This office will benefit in the next financial year from the acquisition earlier in the year of two high quality exhibitions serving the Medical and Telecoms sectors. These acquisitions were successfully integrated into our Kyiv office and were held in October 2004. Both events showed growth on the previous shows prior to ITE ownership. During the year ITE made an additional loan of $2 million to the IEC venue in Kyiv where construction of an additional pavilion is well under way and due for opening by the middle of next year. ITE holds all its events in the IEC venue where ITE was a participant in the funding of the initial development. In Turkey our wholly owned subsidiary (EUF) had a mixed year. The 26,000m2 biennial Ankomak event (construction plant and machinery) was not scheduled to take place and consequently reduced the overall activity level of the office. Optik, an acquisition in 2003 made a successful debut in March 2004. Associate Company - ITF ITF our 50% owned associate business in Istanbul organised 12 events (2003: 16 Events). Significantly the Auto and Otomotiv events were not scheduled in 2004. The next editions of these events have more recently been successfully held in November 2004. Despite this the business managed to produce consistent profits in 2004 albeit from a smaller sales base. We maintain tempered optimism with respect to the economic conditions in Turkey, however the task to improve the profitability of the business in Istanbul remains a challenge given the very low yields and strong influence of trade associations on major events. Western Europe and UK In June this year ITE acquired the associated publishing titles of Womenswear Buyer and Menswear Buyer which support our MODA UK exhibition. These trade magazines provide advertising and marketing services to the same exhibitors at MODA UK and are read by the same buyers who attend the exhibitions. This acquisition enables us to offer a more complete range of marketing services to our customers. The additional publishing staff share the same offices as our exhibition team and are combining their activities and databases. The Spring and Autumn MODA UK exhibitions performed well - but as anticipated last year the events have plateaued in terms of their growth. MODA is currently reviewing plans to expand the business with new sector and market development. ITE has international sales offices based in London and Hamburg. The primary role of these sales offices is to facilitate the sale of international exhibitors into the Group's portfolio of exhibitions. Rest of World The Group established an office in Johannesburg in the year initially to service the World Petroleum Congress event to take place in September 2005. In addition ITE has initiated the launch of an exhibition and conference business in various other parts of Africa - including Libya. ITE continues to work with UNCTAD to prospect new opportunities in Africa and in 2005 will launch a new event in Mozambique. Outlook I am pleased that ITE has concluded the year in a very strong operational and financial position. There is a clear route to growth in each of our core markets. Favourable economic conditions in our core markets, allied to an expansion in venue facilities in Moscow, Ukraine, Kazakhstan and Turkey contribute to a healthy prognosis for our exhibition business. The financial results for 2004 depict a genuinely strong trading result. In addition to organic revenue growth of 11% and 30 new launches, strong gross margins and the benefits of a lower cost base have raised the net Operating margin before charges for goodwill amortisation to a new level of 27% from last year's comparative 24%. ITE has focussed on the strategy of building on the strengths of our key assets in our core markets where we have competitive advantages and local infrastructure. We have sought to supplement our organic growth plans with selective acquisitions principally in markets and sectors where we have in-depth knowledge. We will continue to prospect suitable opportunities on a prudent and opportunistic basis. In the forthcoming year, ITE will manage the 18th World Petroleum Congress in addition to organising our biennial Moscow International Oil and Gas Exhibition and Congress. When coupled with our strongly performing core operations the prospects for 2005 are indeed bright. As of 3 December 2004 ITE had achieved advance sales of £42 million in respect of the next financial year (11% ahead of last year on a like for like basis). I continue to be confident and enthused about the prospects ahead for our business. Ian Tomkins Chief Executive 7 December 2004 Group Financial review Earnings per share The diluted earnings per share increased to 3.8p from 3.0p in the prior year. The Group achieved Headline diluted earnings per share of 4.7p per share compared with 4.2p for the year to 30 September 2003. Headline diluted earnings per share is based upon profit before amortisation and impairment of goodwill, (including associates) and profits or losses on disposal of group undertakings. Acquisitions & disposals ITE has made a number of strategic acquisitions over the last twelve months. In May of this year ITE completed the acquisition of two Ukrainian exhibitions for consideration of $2.8 million in cash. In June of this year ITE's 90% owned subsidiary, ITE Moda UK Limited, acquired 100% of the RAS Publishing Group for a net cash consideration of £2.0 million. Shortly after the year end, on 6 October 2004 ITE acquired 100% of the share capital of Caspian Events Limited for £2.2 million in cash. As reported last year ITE disposed of its 50% interest in its Czech associate Incheba Praha and also its related 50% investment in the Slovakian exhibition, Coneco in November 2003. The overall loss on this transaction of £0.8 million was provided for in the 2003 accounts. There remain two loan repayments due from Incheba Praha of CZK 35 million (£0.7 million) each due in December 2004 and December 2005. In May 2004 ITE disposed of its 50% interest in its Egyptian associate, ACG to its fellow owners for $0.9 million. The sales proceeds are accounted for when they are received and the outstanding amount due under the purchase and sale agreement and not yet received is $0.3 million. Post Balance Sheet Event On 22 October 2004 ITE sold its 100% shareholding in X-RM Limited to its Managing Director, Jonathan Block for £1. Jonathan Block was the original vendor of this business to ITE in 2000. Having reviewed the business of X-RM Limited carefully ITE saw no synergy or positive prospects for this loss making business. There was a loss on disposal of £0.1 million in respect of unamortized goodwill. Tax charge The tax charge of £5.0 million represents 27% of Headline pre-tax profits. The Group anticipates that for the next 2-3 years the tax rate will remain below the UK Corporation tax rate of 30% due to losses available in certain parts of the Group and the lower tax rate experienced in some of our major overseas markets. Capital The Company has issued 3,821,369 ordinary shares of 1p in the year. This represented 1.4% of the issued share capital at 1 October 2003. Of these 3,754,417 were pursuant to the exercise of options and yielded aggregate consideration of £1.0million. The remaining shares were issued as part of Directors' remuneration. The Employees Share Option Trust ('ESOT') held 10,427,000 (3.6%) of the Companies issued share capital at the year end (2003: 9,857,000; 3.5%). The ESOT has acquired further shares in the market over the course of the year. Cash Flow Net cash at 30 September 2004 was £33.5 million (2002: £22.1 million). The cash inflow from operating activities was £21.8 million (2003: £16.9 million). The net cash outflow of £1.3 million on acquisitions and disposals comprises outflows of £3.3 million on acquisitions and £0.2 million on deferred consideration and an inflow of £2.2 million from the disposals of Incheba Praha and ACG in the year A further £3.4 million was applied in taxation payments and £4.5 million was paid to shareholders as dividends. Interest Net interest earned in the year was £1.1 million (2003: £0.7 million). The Group held average cash balances of £27.4 million through the year (2003: £19.7 million). At 30 September 2004 £17.0 million sterling was held on term deposits of between 3 and 12 months. Investment and capital expenditure The Group's capital expenditure on plant and equipment for the year of £0.7 million (2003: £0.5 million) included exhibition equipment, computer equipment and associated software. The Group funds the development of venues and facilities where improved facilities will enhance the prospects and profitability of our organising business. The funding can take the form of a prepayment of future venue fees, or a loan which can be repaid by cash or by offset against future venue fees (both referred to as 'venue loans'). Generally the funding brings rights over future venue use and advantageous pricing arrangements. Venue loans are included under debtors in the balance sheet and are treated as financial investments in the Cash Flow Statement. At 30 September 2004 the Group's Sterling value of the outstanding balances was £4.6 million (2002: £3.3 million) advanced against venue construction projects as follows: 30 September Repayments New Loans 30 September 2003 2004 £m £m £m £m Kyiv 0.8 (0.3) 1.1 1.6 Almaty 0.7 (0.5) 0.6 0.8 St. Petersburg 1.6 (0.8) 1.2 2.0 Bulgarreklama 0.2 - - 0.2 ---- ----- ---- ---- 3.3 (1.6) 2.9 4.6 These balances will be recovered from future venue use within three years except in Bulgaria and St. Petersburg. In St. Petersburg part of the loan repayments relate to future events taking place between 2007 and 2011. ITE is not presently active in Bulgaria and the loan will be repaid by instalments. Financial risk The main risk facing the Group is foreign currency risk. The Board has reviewed and agreed policies to manage financial risk as follows: Foreign Currency risk The Group is exposed to movements in foreign exchange rates against Sterling for both trading transactions and for the translation of net assets and the profits and loss accounts of overseas operations. The principal exposure is to the Euro and Dollar exchange rates which form the basis of pricing for our international customers. During the year the Group experienced net foreign exchange losses of £0.4 million (2003: £0.4 million). The exchange rate for the Euro moved from €1.44: £1 at the beginning of the year to €1.46, though it traded around €1.5: £1 for a large part of the year; the exchange rate for the US dollar started the year at $1.68: £1, and finished the year $1.8: £1 again having traded at weaker levels in mid-year. The bulk of the Group's business is in emerging markets and to minimise the currency risk, the Group invoices predominantly in Euros and US dollars. In 2004 62% of the Group's sales were based on Euros and 28% on $US. The Group has a large proportion of its revenues and costs denominated in non-Sterling currencies. Sterling costs exceed Sterling revenue due to the level of UK based costs - in particular London sales and head office costs. In 2004 the weighted average exchange rate against Sterling used for converting $US sales was $1.69 and Euro sales was €1.44. The Group uses derivative instruments and currency borrowings to protect itself against the effect of currency fluctuations on its balance sheet. The Group's policy on derivative instruments is that: - it will only hedge up to 80% of the value of anticipated cash flows and; - it will not enter into derivative transactions more than 18 months ahead. Over the course of the year the Group has entered into currency borrowings to minimise the exposure to foreign exchange risk. The currency borrowings can be offset against the matching sterling deposits. The net cash balances of £33.5 million at 30 September 2004 are shown in the balance sheet. Interest rate risk The Group finances its operations through cash holdings and debt facilities. The objective of the Group is to maximise investment income and minimise interest costs bearing in mind its liquidity requirements. For short term debt, such as overdraft facilities or debt with a term of less than six months, fixed or floating rates of interest are used. For debt with a term of greater than six months, it is policy that at least 75% must have fixed rates of interest so as to minimise the Group exposure to interest rate movements. It is Group policy that surplus cash is not invested in instruments that would put the capital value at risk. All invested funds have a determinable rate of interest. Liquidity risk The Group policy is to ensure continuity of funding for operational needs through cash deposits and debt facilities as appropriate. The key requirement for the business is to maintain flexibility to allow the Group to take advantage of opportunities that could arise over the short term. The needs of the business are determined on a rolling cash flow forecast basis, covering weekly, monthly and twelve monthly requirements. Short term flexibility is maintained by holding cash in current accounts and high liquidity money market funds. Should debt financing be required, the term of the facility would be matched to funding needs. Going concern After considering the current financial projections for the Group, the Directors have a reasonable expectation that the Company has adequate resources to continue its operations for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts. Russell Taylor Finance Director 7 December 2004 Consolidated Profit and Loss Account For the year ended 30 September 2004 2004 2003 £000 £000 Turnover 60,750 58,934 Cost of sales (33,542) (32,213) __________ __________ Gross profit 27,208 26,721 -------- -------- Net operating expenses before goodwill amortisation (10,883) (12,720) Goodwill amortisation (2,528) (2,331) -------- -------- Total net operating expenses (13,411) (15,051) __________ __________ Operating profit 13,797 11,670 -------- -------- Share of associates' operating profit before 676 836 goodwill amortisation Goodwill amortisation (221) (132) -------- -------- Share of associates' operating profit 455 704 Profit/(provision or loss) on disposal of 323 (779) group undertakings __________ __________ Profit on ordinary activities before interest 14,575 11,595 Interest receivable 1,148 760 Interest payable and similar charges (16) (68) __________ __________ Profit on ordinary activities before taxation 15,707 12,287 Tax on profit on ordinary activities (4,955) (4,030) __________ __________ Profit on ordinary activities after taxation 10,752 8,257 Minority interests (31) 6 __________ __________ Profit for the financial year 10,721 8,263 Dividends paid and proposed (5,984) (4,359) __________ __________ Retained profit for the year 4,737 3,904 ============ ============ Earnings per share Basic 3.9p 3.1p Diluted 3.8p 3.0p Headline diluted 4.7p 4.2p ============ ============ Consolidated Balance Sheet 30 September 2004 2004 2003 (As restated - see Note 1) £000 £000 Fixed assets Goodwill 29,348 30,016 Tangible assets 1,862 1,920 Associates 1,377 1,057 Other investments 74 78 ___________ ___________ 32,661 33,071 Current assets Debtors due within one year 23,426 19,557 Debtors due after one year 4,060 3,914 Cash at bank and in hand 33,546 22,104 ___________ ___________ 61,032 45,575 Creditors: amounts falling due within one year (47,773) (39,035) ___________ ___________ Net current assets 13,259 6,540 ___________ ___________ Total assets less current liabilities 45,920 39,611 Provisions for liabilities and charges (1,498) (984) ___________ ___________ Net assets 44,422 38,627 ============= ============= Capital and reserves Called up share capital 2,852 2,813 Share premium account 29,036 27,996 Merger reserve 2,746 2,746 Option reserve 23 132 ESOT reserve (2,792) (2,334) Profit and loss account 12,329 7,277 ___________ ___________ Equity shareholders' funds 44,194 38,630 ___________ ___________ Minority interests 228 (3) ___________ ___________ Total capital employed 44,422 38,627 ============= ============= Consolidated Cash Flow Statement For the year ended 30 September 2004 2004 2003 £000 £000 Net cash inflow from operating activities 21,754 16,890 Dividends received from associates 172 - Returns on investments and servicing of finance 1,132 692 Taxation (3,363) (3,677) Capital expenditure and financial investment (2,858) (2,306) Acquisitions and disposals (1,345) (3,595) Equity dividends paid (4,545) (4,026) __________ __________ Cash inflow before management of liquid resources 10,947 3,978 and financing Management of liquid resources (19,336) (5,164) Financing 495 433 __________ __________ Decrease in cash in the year (7,894) (753) ============ ============ Consolidated Statement of Total Recognised Gains and Losses For the year ended 30 September 2004 2004 2003 £000 £000 Profit for the financial year Group 10,534 7,762 Associates 187 501 ___________ ___________ 10,721 8,263 Gain/(loss) on foreign currency translation 96 (46) Adjustment to option reserve for lapsed options - 42 ___________ ___________ Total recognised gains and losses relating 10,817 8,259 to the year ============= ============= Notes 1 Basis of preparation This Preliminary Announcement is for the year ended 30 September 2004 and was approved by the Board on 6 December 2004. The financial information set out herein does not constitute the Company's statutory accounts for the years ended 30 September 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) or (3) Companies Act 1985. The results for the year ended 30 September 2003 have been restated to reflect the adoption of UITF 38 'Accounting for ESOP trusts' which resulted in the investment in company shares held by the ESOT being reclassified from Other investments to ESOT Reserve. The accounts have been prepared on the historical cost basis and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 2 Net operating expenses Net operating expenses includes total administrative expenses of £13.7 million (2003: £15.3 million) and rental income of £303,000 (2003: £287,000). In the prior year, administrative expenses included £0.4 million of redundancy costs and, in connection with the Group's activities in the Czech Republic and Slovakia, £0.8 million of operating charges and £0.6 million of goodwill amortisation. 3 Earnings per share The calculations of earnings per share are based on the following results and numbers of shares. Headline diluted Basic and diluted 2004 2003 2004 2003 £000 £000 £000 £000 Profit for the financial year 10,721 8,263 10,721 8,263 Amortisation of goodwill (including 2,749 2,463 - - associates) (Profit)/loss on disposal of group (323) 779 - - undertakings ________ ________ ________ ________ 13,147 11,505 10,721 8,263 ========== ========== ========== ========== 2004 2003 Number of shares ('000) Number of shares ('000) Weighted average number of shares: For basic earnings per share 274,435 270,527 Exercise of share options 7,203 3,643 ___________ ___________ For diluted earnings per share 281,638 274,170 ============= ============= Headline diluted earnings per share is intended to provide a consistent measure of group earnings on a year on year basis. Headline diluted earnings per share is calculated using profit for the financial year before amortisation of goodwill and profits or losses arising on disposal of group undertakings. 4 Reserves Share Merger Option ESOT Profit and Total premium reserve reserve reserve loss account account £000 £000 £000 £000 £000 £000 1 October 2003 27,996 2,746 132 - 7,277 38,151 (as previously reported) Restatement - - - (2,334) - (2,334) for UITF 38 ________________________________________________________________________________ 1 October 2003 27,996 2,746 132 (2,334) 7,277 35,817 (as restated) Exercise of options 1,005 - (109) 30 - 926 Retained profit - - - - 4,737 4,737 for the year Gain on foreign - - - - 96 96 currency translation Gain on exercise of - - - - 20 20 ESOT Options issued in - - - - 199 199 the year at a discount to market value Shares issued for 35 - - - - 35 remuneration Purchase of shares - - - (488) - (488) _________ _________ ________ _________ ________ ________ 30 September 2004 29,036 2,746 23 2,792) 12,329 41,342 =========== ========== ========= ========== =========== ======== 5 Cash flow notes Reconciliation of operating profit to operating cash flows 2004 2003 £000 £000 Operating profit 13,797 11,670 Depreciation charges 471 454 Amortisation 2,528 2,331 Loss on sale or write down of fixed assets 103 267 (Increase)/decrease in debtors (2,638) 1,217 Increase in creditors 6,546 649 Increase in provisions 947 302 __________ __________ Net cash inflow from operating activities 21,754 16,890 ============ ============ Analysis of net funds 30 September 30 September 2003 Cash flow 2004 £000 £000 £000 Cash at bank and in hand 16,940 (7,894) 9,046 __________ __________ __________ Net funds 16,940 (7,894) 9,046 Cash held on deposit 5,164 19,336 24,500 __________ __________ __________ Cash shown on balance sheet 22,104 11,442 33,546 ============ ============ ============ Reconciliation of net cash flow to movement in net funds 2004 2003 £000 £000 Decrease in cash in the year (7,894) (753) __________ __________ Movement in net funds in year (7,894) (753) Net funds at 1 October 16,940 17,693 __________ __________ Net funds at 30 September 9,046 16,940 ============ ============ 6 Post balance sheet events On 22 October 2004 the Group sold 100% of the shares in X-RM Limited to Jonathan Block, a director of X-RM Limited, for £1. The Profit and Loss account for the year ended 30 September 2004 includes a provision against the value of goodwill in X-RM Limited of £142,000 within profit/(provision or loss) on disposal of group undertakings and an accrual for redundancy and restructuring costs of X-RM Limited of £100,000 within administrative expenses. On 5 October 2004 the Group acquired 100% of the shares in Caspian Events Limited for £2.2 million. This information is provided by RNS The company news service from the London Stock Exchange

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