Interim Results
ITE Group PLC
24 May 2004
ITE GROUP PLC
INTERIM RESULTS ANNOUNCEMENT
ITE Group plc, the international exhibitions specialist, today announces interim
results for the six months ended 31 March 2004.
Highlights:
•Turnover: £20.2 million (2003: £18.8 million) up 7%
•Headline profit before tax of £2.1 million having absorbed a foreign
exchange loss of £1 million (2003: £2.2 million after foreign exchange
profit of £0.1 million)
•Cash reserves: £29.4 million (2003: £19.4 million) up 50%
•Strong trading performance from ten leading events
•Financing of improved additional exhibition facilities in Almaty, Kyiv,
and St Petersburg.
•Acquisition of two leading events in Ukraine
•Strong forward sales for the second half of financial year
•Increased interim dividend of 0.55p per share (2003: 0.5p)
Commenting on the results, Iain Paterson, Chairman, said:
'The interim results demonstrate a good underlying operating performance from
ITE Group with solid progress made in strengthening our presence in all of our
key markets. Forward sales for the second half of the year are in line with
market expectations and I look forward to the future with confidence. The Board
has approved an increase in the interim dividend in line with our progressive
policy.'
- Ends -
Enquiries:
Iain Paterson/Ian Tomkins 020 7596 5000
ITE Group plc
Bridget Fury / David Simonson 020 7653 6620
Merlin PR
Interim report
ITE has produced a strong trading result for the first six months with turnover
up 7% and Headline profit before tax of £2.1m (2003: £2.2m). Reported pre-tax
profits were £0.8m (2003: £1.2m). These results were achieved despite absorbing
a £1.0m foreign exchange loss (2003: £0.1m profit), attributable to Sterling's
recent strength against the Euro and the U.S. Dollar.
ITE has been active in working with its venue partners to facilitate improved
exhibition facilities with additional space available for growth. In February we
agreed terms to finance the construction of a new pavilion in Almaty
(Kazakhstan) which will provide much needed new space. Recently we finalised
terms to part fund the building of a new pavilion in Kyiv (Ukraine) and we also
agreed terms to part fund a new hall project in St Petersburg (Russia). These
arrangements variously provide for an increased opportunity for ITE to grow our
business, offer improved financial terms and secure exhibition tenancy rights
for the future.
On 13 May 2004 ITE acquired two quality trade events in Kyiv, in the health and
telecoms sectors. These acquisitions represent 'bolt-on' opportunities and
reflect ITE's strategy to acquire events where we perceive good market and
sector fit with our existing operations
ITE's total commitment to the venue loans and acquisitions above is $8.0m of
which $7 m falls due after 31 March 2004. Since 31 March 2004 ITE has agreed to
dispose of its 50% share in its Egyptian associate ACG.
Cash flow and cash balances remain strong and our core markets continue to
perform very well.
Dividend
The Board has approved an interim dividend of 0.55p (2003: 0.5p) per share. This
will be payable on 16 July 2004 to shareholders on the register at 11 June 2004.
Results
Turnover for the first six months of the year was £20.2m (2003: £18.8m). Gross
profit increased by £0.4m although foreign exchange losses of £1.0m held back
Headline profit before tax to £2.1m (2003: £2.2m). Turnover increased 7% against
the same period last year. Volume of square metres sold was 12% higher over the
same period last year, though the acquisition of a low yielding Turkish
exhibition meant the volume increase was not proportionately reflected in
turnover. Nevertheless gross margins remained consistent at 36% year on year.
Operating expenses of £6.8m (2003: £ 6.0m) comprised goodwill amortisation of
£1.3m (2003: £0.9m) and other operating expenses of £5.5m (2003: £ 5.1m).
Excluding the impact of £1.0m of foreign exchange losses (2003: £ 0.1m profit)
ITE delivered a £0.7m reduction on overheads against the same period last year.
ITE has partially hedged its Euro cash flow for the second half of the year, and
if current exchange rates prevail will recover some of the exchange losses in
the second half.
The share of associates' result this year principally relates to our 50% share
of ITF in Turkey. ITF's first half was affected by the re-scheduling of two
events, one of which will take place later this year. ITF's exhibition calendar
is heavily weighted to the second half of the year.
Net interest receipts were similar to this time last year. Higher interest rates
on cash balances this year helped offset a one-off interest receipt included in
last years results. Profit before tax for the first six months was £0.8m (2003:
Profit before tax £1.2m). Net assets at 31 March 2004 were £38.3m (2003: £34.1
m). Net cash balances stood at £29.4m (2003: £19.4m).
Events
During the period to 31 March 2004, ITE organised 62 events (2003: 69 events).
Whilst there were 10 new launches in the first six months, the total number of
events fell as a result of the disposal of our business in the Czech Republic
last November. The following events were the top ten contributors to interim
gross profits:
Area (sq.m.) Area (sq.m.)
-------------- --------------
2003/2004 2002/2003
----------- -----------
Moscow International Travel and Tourism 16,700 17,400
Kazakhstan Oil & Gas 6,200 5,300
Ingredients Russia 4,700 4,500
MODA UK Spring 10,300 8,950
Moscow International Boat and Sports Shows 9,900 7,500
Transrussia 3,100 3,700
Kievbuild 4,100 3,600
Industrial Week Moscow 1,700 1,300
Hospital St Petersburg 1,900 1,800
Worldfood Ukraine 2,800 1,500
Overall growth in the above shows was 11% in terms of space sales and 10% in
terms of revenue.
The 11th edition of our leading Moscow International Travel and Tourism event
was once again a considerable success. Although volume sales were slightly down,
higher average yield led to an 11% increase in revenue. The Moscow Boats and
Sports show was run as two separate events for the first time this year. This
contributed to excellent overall growth with the Boat show being particularly
successful. The 9th edition of the Transrussia event maintained its pre-eminence
in the market and performed well in the face of new competition.
In Central Asia, ITE's most significant event is the Kazakhstan Oil and Gas
exhibition and conference. The strong performance, growing by 18% in size and
11% in revenues, reflects the ongoing considerable interest in the recently
discovered and developing offshore Caspian fields. The new exhibition facility
in Almaty will increase the scope for future expansion.
ITE's Kyiv office enjoyed a successful Kievbuild, whilst Worldfood Ukraine
doubled in size. Significantly ITE has moved to develop its business in Kyiv
with the acquisition of the two shows in the health and telecoms sectors. We are
pleased to advise as part of the agreement to part finance the new exhibition
pavilion, ITE has now extended its venue rights in Kyiv to 2011.
The MODA UK fashion exhibition in Birmingham recorded 16% growth in space sales,
with Womenswear continuing to drive results and a more successful Menswear event
being a notable achievement.
Outlook
The Group's core exhibitions for this year continue to trade strongly. Russia
Building Week and Windows and Doors which were both held in April, recorded an
overall 10% increase in revenues on 5% increase in space sales. ITE has signed a
new venue agreement for 2005 which will allow these currently space constrained
events to grow by utilising the newly built Crocus exhibition centre in Moscow.
At 14 May 2004 £53.3m of revenue had been contracted for this financial year.
Encouraging sales contracts are in place and ITE has some protection against
adverse foreign exchange movements in the second half. ITE remains confident
about its full year results.
ITE continues to focus primarily on generating and delivering organic growth in
its existing key markets. In addition we have broadened our market reach with
successful launches of various events in Africa.
ITE's balance sheet remains very strong with net cash balances of £29.4m which
enables us to strengthen our existing business and to prospect and pursue
acquisition opportunities where such operations fit with our existing know-how
and infrastructure.
Ian Tomkins Iain Paterson
Chief Executive Officer Chairman
Consolidated Profit and Loss Account
Six months to Six months to Year ended 30
31 March 2004 31 March 2003 September 2003
Notes Unaudited Unaudited Audited
£000 £000 £000
Turnover 20,153 18,841 58,934
Cost of sales (12,938) (12,062) (32,213)
__________ __________ __________
Gross profit 7,215 6,779 26,721
--------- --------- ---------
Net operating
expenses
before
goodwill (5,566) (5,130) (12,720)
amortisation
Goodwill
amortisation (1,274) (909) (2,331)
--------- --------- ---------
Total
operating
expenses (6,840) (6,039) (15,051)
__________ __________ __________
Operating
profit 375 740 11,670
--------- --------- ---------
Share of
associates'
operating
profit before 134 266 836
goodwill amortisation
Goodwill
amortisation (76) (81) (132)
--------- --------- ---------
Share of
associates'
operating
profit 58 185 704
Provision or
loss on
disposal of
group
undertakings - - (779)
__________ __________ __________
Profit on
ordinary
activities
before
interest 433 925 11,595
Investment
income 365 320 760
Interest
payable (2) (14) (68)
__________ __________ __________
Profit on
ordinary
activities
before
taxation 796 1,231 12,287
Tax on profit
on ordinary
activities (528) (535) (4,030)
__________ __________ __________
Profit on
ordinary
activities
after taxation 268 696 8,257
Minority
interests (1) (59) 6
__________ __________ __________
Profit for the
financial
period 267 637 8,263
Dividends (1,448) (1,406) (4,359)
__________ __________ __________
Retained
(loss)/earnings (1,181) (769) 3,904
============ ============ ============
Earnings per share
Basic 3 0.1p 0.2p 3.1p
Diluted 3 0.1p 0.2p 3.0p
Headline
diluted 3 0.6p 0.6p 2.2p
============ ============ ============
Consolidated Balance Sheet
All results derived from 31 March 2004 31 March 2003 30 September
the continuing operations 2003
of the Group.
Notes Unaudited Unaudited Audited
(As restated (As restated
-Note 1) -Note 1)
£000 £000 £000
Fixed assets
Goodwill 26,961 30,166 30,016
Tangible assets 2,007 2,025 1,920
Associates 1,075 688 1,057
Other investments 56 180 78
___________ ___________ ___________
30,099 33,059 33,071
Current assets
Debtors due within one
year 4 16,942 18,333 19,557
Debtors due after one
year 2,966 5,875 3,914
Cash at bank and in hand 29,356 19,353 22,104
___________ ___________ ___________
49,264 43,561 45,575
Creditors: amounts
falling due within one
year 4 (40,118) (41,854) (39,035)
___________ ___________ ___________
Net current assets 9,146 1,707 6,540
___________ ___________ ___________
Total assets less
current liabilities 39,245 34,766 39,611
Creditors: amounts
falling due after more
than one year - (53) -
Provisions for
liabilities and charges (940) (567) (984)
___________ ___________ ___________
Net assets 38,305 34,146 38,627
=========== =========== ===========
Capital and reserves
Called-up share capital 2,851 2,811 2,813
Share premium account 29,018 31,727 27,996
Merger reserve 2,746 - 2,746
ESOT reserve (2,303) (2,357) (2,334)
Shares to be issued 28 - -
Option reserve 23 174 132
Profit and loss account 5,945 1,729 7,277
___________ ___________ ___________
Equity shareholders'
funds 38,308 34,084 38,630
___________ ___________ ___________
Minority interests (3) 62 (3)
___________ ___________ ___________
Total capital employed 38,305 34,146 38,627
=========== =========== ===========
Consolidate Cash Flow Statement
Note Six months to Six months to Year ended 30
31 March 2004 31 March 2003 September 2003
Unaudited Unaudited Audited
£000 £000 £000
Net cash
inflow from
operating
activities 5 9,196 9,222 14,439
Returns on
investments
and servicing
of finance 345 306 692
Taxation (2,017) (1,404) (3,677)
Capital
expenditure
and financial
investment (73) (2,280) 145
Acquisitions
and disposals 7 1,818 (1,919) (3,595)
Equity
dividends paid (3,012) (2,660) (4,026)
__________ __________ __________
Cash inflow
before
management of
liquid
resources and
financing 6,257 1,265 3,978
Management of
liquid
resources (5,049) - (5,164)
Financing 995 395 433
__________ __________ __________
Increase/(decr
ease) in cash
in the period 2,203 1,660 (753)
========== ========== ==========
Analysis of net funds
30 September 31 March
2003 Cash flow 2004
£000 £000 £000
Cash at bank and in hand 16,940 2,203 19,143
__________ __________ __________
Net funds 16,940 2,203 19,143
Cash held on deposit 5,164 5,049 10,213
__________ __________ __________
Cash shown on balance sheet 22,104 7,252 29,356
========== ========== ==========
Notes
1. The interim results have been prepared on the historical cost basis, are
unaudited and do not constitute statutory accounts within the meaning of Section
240 of the Companies Act 1985. The interim results are prepared on the basis of
accounting policies set out in the annual financial statements of the Group for
the year ended 30 September 2003 with the exception of 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
results for the period ended 31 March 2003 and year ended 30 September 2003 have
also been restated to reflect this treatment. These interim results were
approved by the Board on 24 May 2004 and copies of this document are being sent
to shareholders. Further copies are available from the Company's registered
office.
2. The results for the year ended 30 September 2003 have been extracted from the
statutory accounts, which have been reported on by the Group's auditors and have
been delivered to the Registrar of Companies. The auditors' report was
unqualified and did not contain any statement under section 237 (2) or (3) of
the Companies Act 1985.
3. 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/(loss) for the
financial period 267 637 267 637
Amortisation of
goodwill 1,350 990 - -
________ ________ ________ ________
1,617 1,627 267 637
======== ======== ======== ========
2004 2003
Number of Number of
shares ('000) shares ('000)
Weighted average number of
shares:
For basic earnings per
share 273,716 269,769
Exercise of share
options 7,059 3,201
___________ ___________
For diluted earnings
per share 280,775 272,970
=========== ===========
Headline diluted earnings per share is intended to provide a consistent measure
of group earnings on a year on year basis. Headline diluted earnings per share
is calculated using profit for the financial year before amortisation and
impairment of goodwill and profits or losses arising on disposal of group
undertakings.
4. Debtors include trade debtors of £11.5m (31 March 2003: £12.6m; 30 September
2003: £15.5m) .
Creditors: amounts falling due within one year include deferred income of £32.9m
(31 March 2003: £32.1m; 30 September 2003: £26.0m).
5. Reconciliation of operating profit to operating cash flows
Six months to Six months to Year ended 30
31 March 2004 31 March 2003 September 2003
Unaudited Unaudited Audited
£000 £000 £000
Operating
profit 375 740 11,670
Depreciation
charges 232 234 454
Amortisation 1,274 909 2,331
(Profit)/loss
on sale of
fixed assets (6) 40 267
Decrease/(incr
ease) in
debtors 1,880 (1,127) (1,234)
Increase in
creditors 5,604 8,426 649
(Decrease)/inc
rease in
provisions (163) - 302
__________ __________ __________
Net cash
inflow from
operating
activities 9,196 9,222 14,439
========== ========== ==========
6. Reconciliation of Headline profit before taxation to Profit on ordinary
activities before taxation
Six months to Six months to Year ended 30
31 March 2004 31 March 2003 September 2003
Unaudited Unaudited Audited
£000 £000 £000
Profit on
ordinary
activities
before
taxation 796 1,231 12,287
Amortisation
of goodwill
and trade
investments
(including
associates) 1,350 990 2,463
Loss on
disposal of
subsidiary
undertakings - - 779
__________ __________ __________
Headline
profit before
taxation 2,146 2,221 15,529
========== ========== ==========
7. The cash inflow arising on acquisitions and disposals includes £2.0 million
from the disposal of our shareholding in Incheba Praha and our interest in the
Coneco exhibition.
Independent Review Report to ITE Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2004 which comprises the profit and loss account,
the balance sheet, the cash flow statement, the analysis of net funds and
related notes 1 to 7. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
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 interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2004.
Deloitte & Touche LLP
Chartered Accountants
London
24 May 2004
Interim dividend
Record date 11 June 2004
Payment date 16 July 2004
Final dividend
Record date January 2005
Payment date March 2005
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