Interim Results

ITE Group PLC 22 May 2006 22 May 2006 ITE GROUP PLC INTERIM RESULTS ANNOUNCEMENT Highlights Six months ended Six months ended % Change 31 March 2006 31 March 2005 Turnover Â£26.2m Â£22.7m 15% Headline pre-tax profit* Â£3.7m Â£3.3m 11% Reported Profit before tax ** Â£3.0m Â£3.2m -7% Headline diluted earnings per share* 1.0p 0.8p 18% Diluted earnings per share 0.8p 0.8p -4% Dividend per share 1.0p 0.9p 11% â€¢ Increase in sales and headline profits reflect strong demand for emerging market exhibitions â€¢ Turnover up 15% â€¢ Headline profit before tax of Â£3.7m up 11% â€¢ Headline diluted earnings per share up 18% â€¢ Forward sales up 12%+ on a like for like basis â€¢ Board are confident of prospects for the full year Commenting on the results, Iain Paterson, Chairman, said: 'The Group reported another strong financial and trading performance. The results demonstrate our ability to grow our core business, to launch new events successfully and to develop acquired events. ITE has built a strong presence in its core markets and we are well positioned to deliver further growth in the future. The second half has progressed well and is in line with our expectations. As a result, the Board remains confident of the prospects for the 2006 financial year.' * Headline pre-tax profit is defined as profit before tax, amortisation of intangible assets arising on business combinations and impairment of goodwill and intangible assets and profits or losses arising on disposal of group undertakings - see the Profit and Loss Account for details Headline diluted earnings per share is calculated using profit before amortisation of intangible assets arising on business combinations and impairment of goodwill and intangible assets and profits or losses arising on disposal of group undertakings. ** Reported profit before tax of Â£3.0m (2005: Â£3.2m) is after amortisation charges of Â£0.7m (2005: Â£0.1m). Net interest receipts for the first six months were Â£0.2m (2005: Â£0.9m) on cash balances reduced by the Â£30m share buyback made in August 2005 Enquiries: Ian Tomkins ITE Group plc 020 7596 5000 Charles Palmer/Tim Spratt Financial Dynamics 020 7831 3113 Interim Statement ITE has delivered a positive set of trading results for the first six months of the financial year. Turnover grew 15% to Â£26.2m (2005: Â£22.7m) and headline profit before tax rose 11% to Â£3.7m (2005: Â£3.3m). Reported pre-tax profit for the six months was Â£3.0m (2005: Â£3.2m). Demand for ITE Group's exhibitions and conferences remained strong throughout the period, reflecting growing interest in ITE's core markets. The Group has continued to implement its strategy of supporting the core business with long term agreements with key venues. In October 2005 the Group advanced $10m against future tenancy payments to the Moscow venue, Crocus, as part of a long term agreement. Other venue prepayments made in the first six months were $2m made to the IEC venue in Kyiv to support the construction of Phase III of its venue, and $0.6m of a total $1.5m advance to the Atakent venue in Almaty, Kazakhstan to support the further expansion of available venue facilities. These venue expansion plans will assist the Group's growth opportunities in these regions. Board and Management Malcolm Wall joined the Board as a non - executive Director on 4 May 2006. Malcolm brings senior board level experience and extensive knowledge of the international B2B media sector. He is a member of the Audit, Remuneration and Nomination Committees of the Board. As previously announced Marco Sodi, the remaining appointee of Veronis Suhler Stevenson resigned from the Board on 23 January 2006, following the sale of Veronis Suhler Stevenson's residual shareholding in ITE Group plc. Dividend The Board has approved an interim dividend of 1.0p per share (2005: 0.9p). The dividend reflects the Board's policy of progressively increasing the dividend in line with underlying earnings growth. International Financial Reporting Standards The results for the six months to 31 March 2006 are the first that the Group has published under International Financial Reporting Standards ('IFRS'). The comparative figures for last year have been re-stated on a consistent basis. The principal changes affecting the results are the inclusion of a charge for the cost of share options for employees (share based payments), the replacement of goodwill amortisation with amortisation of intangible assets and the application of fair value accounting to certain venue advances and to hedging instruments. ITE Group plc released a full statement of its adopted IFRS accounting policies on 21 March 2006. A copy of the IFRS statement is available on ITE's website: www.ite-exhibitions.com Financial Performance Turnover for the first six months of the year increased 15% to Â£26.2m (2005: Â£22.7m) particularly driven by strong sales in Central Asia and Ukraine, and supported by the acquisitions made last year in the UK and Ukraine. Gross margins across the Group are consistent with last year at 38% and gross profit improved by 16% to Â£9.9m (2005: Â£8.6m). The Footwear and BTO AgriHort acquisitions together accounted for Â£1.6m of the increase in revenue and Â£0.7m of the increase in gross profit for the first half. Operating profit for the first six months was Â£2.7m after administrative costs of Â£7.3m (2005: Â£2.3m after administrative costs of Â£6.3m). Administrative costs include a charge for amortisation of intangible assets of Â£0.7m (2005: Â£0.1m). Foreign exchange gains or losses included in administrative expense were Â£nil for the first six months of this year (2005: Â£0.4m loss). Net interest receipts for the first six months were Â£0.2m (2005: Â£0.9m). The decline in interest receipts primarily reflects the Group's Â£30m share buyback carried out in August 2005. The Group's 50% owned associate in Turkey made a loss of Â£0.1m in the six months to 31 March 2006 (2005: profit Â£0.1m). The result reflected the impact of difficult trading conditions on the textile fabrics event, and the phasing of the biennial Autoshow event. At 31 March 2006 the Group had a strong balance sheet with Â£30.1m of net assets. Cash at 31 March 2006 was Â£14.9m, an increase of Â£1.8m over the first six months. The Group's cash flow from operations was Â£17.4m of which Â£6.8m was applied in making advances and prepayments to venues. Trading Highlights & Review of Operations In the six months to 31 March 2006 ITE organised 52 events (2005: 69 events). The Group discontinued a number of exhibitions in the ordinary course of business. Total square metres sold in 2006 were 123,100 (2005: 97,000). An analysis of the Group's sales and gross profit for the first six months is set out below. The exhibition business for the first six months increased over last year's comparable figures by 27% in volume sales and by 15% in revenue. Square Gross Metres Revenue Profit '000 Â£'m Â£'m First half 2005* 97.0 21.9 8.0 Core event net growth 16.4 1. 8 0. 8 Acquisitions 9.7 1. 6 0. 7 123.1 25.3 9.5 Publishing activity - 0.9 0.4 First half 2006 123.1 26.2 9.9 * excludes Publishing activity Russia The Group is experiencing strong demand underpinned by the continuing prosperity of the Russian economy. In the first half Moscow International Travel and Tourism, TransRussia and Ingredients Russia all delivered good performances. TransRussia grew by 20% and Moscow International Travel and Tourism recorded a marginal increase in volume, albeit at a slightly reduced average yield per square metre. The first half of the reporting year only includes approximately 20% of the Group's total Moscow activity, and the sales performance of the Moscow business over the first six months was in line with our expectations. The St. Petersburg based exhibitions saw a small drop in activity level as some international exhibitors re-focused their participation from the St. Petersburg events to the larger Moscow shows. Central Asia The Central Asia and Caucasus regions have continued their strong growth this year. The Kazakhstan Oil & Gas Exhibition and Conference, which took place in October, reported revenue growth of 10% over the previous event. The exhibition was space constrained in 2005, but will be assisted for the forthcoming Autumn season by the construction of a new pavilion for October 2006. One highlight of the first half was the launch of Kazbuild Spring in March which was a resounding success for a new launch and is indicative of the demand in this sector. Bakubuild in Azerbaijan was rescheduled from September to October 2005 and made an increased contribution over its preceding event. Eastern & Southern Europe The Kyiv office reported a 30% increase in its volume sales and operating results for the first six months, in which it holds most of its key events. Among the highlights of this strong performance was the growth in the construction event, Kievbuild, which expanded into new space built at the IEC venue. Kiev AgriHort, the premier international agricultural event acquired last year, grew well under ITE's stewardship and benefited from the additional available venue space. EUF, our wholly owned business in Turkey, has delivered a useful first half, though ITF, our 50% associate business, has struggled amidst a down-turn in the Turkish textile industry in the face of competition from the Far East. Western Europe & UK The spring MODA event has consolidated its position as the UK's leading fashion exhibition. The newly acquired Footwear UK show which runs concurrently with MODA grew from its pre-acquisition level and benefited from re-branding and enhanced marketing from ITE's magazine publishing division. RAS Publishing performed well and made an improved contribution to the Group in the first half. Outlook April is the busiest month in ITE Group's exhibition season with events contributing over a third of annual turnover. Major events which have taken place since 31 March include the building shows, MosBuild and MosBuild+, which together this year increased by a further 25%, utilising for the first time the new pavilion 2 at the Crocus venue. The continued strength of the Moscow exhibition market was also reflected in the other April events with Moscow International Protection and Security, Expoelectronica and the Moscow International Boat show all recording double digit growth. In Moscow, the Group will pursue opportunities presented by the recent increase in available quality venue space, whilst monitoring and combating the competition. The Ukraine and Central Asia exhibition businesses are well founded and expect to continue their growth, fuelled by strong demand and the supply of additional venue space. ITE has built a very strong presence in its core markets and is well positioned to continue to deliver further good growth. As of 18 May 2006, the Group had booked revenues of Â£69.5m for the full year. This is in line with our expectations and currently represents in excess of a 12% increase on a like for like basis over the same period last year. The second half has progressed well to date and the Board remains positive and confident of the prospects for the 2006 financial year. Iain Paterson Ian Tomkins Chairman Chief Executive Consolidated Income Statement Six months to Six months to Year ended 30 31 March 2006 31 March 2005 September 2005 Notes Unaudited Unaudited Audited Â£000 Â£000 Â£000 Revenue 26,175 22,666 78,547 Cost of sales (16,236) (14,116) (42,552) __________ __________ __________ Gross profit 9,939 8,550 35,995 Net administrative expenses (6,524) (6,140) (12,532) before amortisation Amortisation 1 (733) (140) (378) Total administrative expenses (7,257) (6,280) (12,910) __________ __________ __________ Operating profit 2,682 2,270 23,085 Share of associates' operating (71) 92 393 (loss)/profit Profit on disposal of group - - 221 undertakings Income from investments 3 641 1,098 2,068 Finance costs (285) (256) (596) __________ __________ __________ Profit on ordinary activities before 2,967 3,204 25,171 taxation Tax on profit on ordinary activities (928) (904) (6,781) __________ __________ __________ Profit for the period 2,039 2,300 18,390 __________ __________ __________ Attributable to: Equity holders of the parent 2,022 2,300 18,423 Minority interests 17 - (33) __________ __________ __________ 2,039 2,300 18,390 __________ __________ __________ Earnings per share (p) Basic 4 0.8 0.8 6.7 Diluted 4 0.8 0.8 6.5 __________ __________ __________ The results stated above relate to continuing activities of the Group Consolidated Balance Sheet 31 March 2006 31 March 2005 30 September 2005 Notes Unaudited Unaudited Audited Â£000 Â£000 Â£000 Non-current assets Goodwill 32,705 30,880 32,771 Other intangible assets 5,689 2,162 5,989 Property, plant & equipment 1,234 1,182 1,126 Investments in associates 1,033 1,237 1,410 Venue advances and other loans 3,180 2,698 2,216 Deferred tax asset 1,797 1,209 1,395 ___________ ___________ ___________ 45,638 39,368 44,907 Current assets Debtors due within one year 5 29,345 22,643 22,722 Cash and cash equivalents 7 14,852 38,009 13,019 ___________ ___________ ___________ 44,197 60,652 35,741 Total assets 89,835 100,020 80,648 Current liabilities Trade and other payables 5 (55,786) (49,859) (43,844) ___________ ___________ ___________ (55,786) (49,859) (43,844) Non-current liabilities Provisions for liabilities and (2,369) (2,497) (3,038) charges Deferred tax liabilities (1,549) (484) (1,671) ___________ ___________ ___________ (3,918) (2,981) (4,709) Total liabilities (59,704) (52,840) (48,553) ___________ ___________ ___________ Net assets 30,131 47,180 32,095 ___________ ___________ ___________ Capital and reserves Called-up share capital 2,607 2,887 2,599 Share premium account 558 29,877 38 Merger reserve 2,746 2,746 2,746 ESOT reserve (3,021) (3,580) (3,562) Profit and loss account 27,030 15,022 30,080 ___________ ___________ ___________ Equity attributable to equity 29,920 46,952 31,901 holders of the parent ___________ ___________ ___________ Minority interests 211 228 194 ___________ ___________ ___________ Total equity 30,131 47,180 32,095 ___________ ___________ ___________ Consolidated Cash Flow Statement Six months to Six months to Year ended 30 31 March 2006 31 March 2005 September 2005 Notes Unaudited Unaudited Audited Â£000 Â£000 Â£000 Cash flows from operating activities Operating profit 2,682 2,270 23,085 Adjustments for: Depreciation and amortisation 987 364 826 (Decrease)/increase in provisions (22) 738 1,531 __________ __________ __________ Operating cash flows before 3,647 3,372 25,442 movements in working capital (Increase)/decrease in trade (1,034) 1,569 1,970 receivables Increase in trade payables 14,767 9,330 1,355 __________ __________ __________ Cash generated from operations 17,380 14,271 28,767 Tax paid (4,352) (4,510) (8,378) Interest paid (285) (256) (596) __________ __________ __________ Net cash from operating activities 12,743 9,505 19,793 Cash flow from investing activities Interest received 409 1,098 2,085 Dividends received from associates 322 437 437 Venue advances and loans (6,782) 440 443 Acquisition of businesses (1,061) (2,347) (5,785) Purchase of property, plant & (226) (182) (430) equipment __________ __________ __________ Net cash used in investing (7,338) (554) (3,250) activities Cash flows from financing activities Dividends paid (4,623) (4,560) (7,088) Share cancellation - - (30,185) Net cash flow in relation to ESOT 541 (788) (724) shares Proceeds from issue of share capital 510 860 927 __________ __________ __________ Net cash flows from financing (3,572) (4,488) (37,070) activities Net increase/(decrease) in cash and 1,833 4,463 cash equivalents (20,527) Cash and cash equivalents at 13,019 33,546 33,546 beginning of period __________ __________ __________ Cash and cash equivalents at end of 7 14,852 38,009 13,019 period __________ __________ __________ Notes 1. The interim results have been prepared in accordance with IFRS that the directors expect to be applicable as at 30 September 2006. IFRS are subject to amendment or interpretation by the International Accounting Standards Board and there is an ongoing process of review and endorsement by the European Commission. For these reasons, it is possible that the information for the six months ended 31 March 2005 and the restated information for the year ended 30 September 2005 may be subject to further change before its inclusion in the Group's 2006 report and accounts, which will contain the Group's first complete financial statements prepared in accordance with IFRS. The Company adopted IFRS with a transition date of 1 October 2004. Comparative figures for 2005, which have previously been reported in accordance with accounting principles generally accepted in the United Kingdom ('UK GAAP'), have been restated to comply with IFRS. An analysis of the restatement of the Group's results for the year ended 30 September 2005 and the accounting policies used under IFRS was included in an announcement published on 21 March 2006 that is available on the Company's website, www.ite-exhibitions.com. The Company adopted IAS32 'Financial Instruments: Disclosure and Presentation' and IAS39 'Financial Instruments: Recognition and Measurement' prospectively from 1 October 2005. As a consequence of adopting IAS32 and IAS39, the Company recognised a loss of Â£500,000 in equity at that date. The amortisation charge in these financial statements is from intangible assets arising on business combinations. These financial statements do not constitute statutory accounts as defined by Section 240 of the Companies Act 1985. These interim results were approved by the Board on 19 May 2006 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 2005 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. Income from investments Six months to 31 Six months to 31 Year ended 30 March 2006 March 2005 September 2005 Unaudited Unaudited Audited Â£000 Â£000 Â£000 Interest receivable from bank deposits 386 1,066 2,002 Interest receivable on advances to venues 18 15 34 Interest receivable on loan to Incheba Praha 5 17 32 Fair value adjustment to venue advances 232 - - __________ __________ __________ 641 1,098 2,068 4. The calculations of earnings per share are based on the following results and numbers of shares. Headline diluted Basic and diluted 2006 2005 2006 2005 Â£000 Â£000 Â£000 Â£000 Profit for the financial period 2,022 2,300 2,022 2,300 Amortisation 733 140 - - Tax effect of amortisation (158) (42) - - ________ ________ ________ ________ 2,597 2,398 2,022 2,300 ________ ________ ________ ________ 2006 2005 Number of shares ('000) Number of shares ('000) Weighted average number of shares: For basic earnings per share 250,710 276,479 Exercise of share options 10,406 8,762 ___________ ___________ For diluted earnings per share 261,116 285,241 ___________ ___________ 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. 5. Debtors include trade debtors of Â£13.5m (31 March 2005: Â£14.6m; 30 September 2005: Â£17.6m). Creditors: amounts falling due within one year include deferred income of Â£47.4m (31 March 2005: Â£43.5m; 30 September 2005: Â£32.2m). 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 2006 31 March 2005 September 2005 Unaudited Unaudited Audited Â£000 Â£000 Â£000 Profit on ordinary activities before taxation 2,967 3,204 25,171 Amortisation 733 140 378 Loss on disposal of subsidiary undertakings - - 221 __________ __________ __________ Headline profit before taxation 3,700 3,344 25,770 __________ __________ __________ 7. As a result of the capital reduction in July 2005, Â£4.6m is held in a trust account, which will be released as certain creditors are paid in full. At 31 March 2006, Â£0.5m of the cash in trust was expected to be released within one year. 8. Reconciliation of results for the period to 31 March 2005 from UK GAAP to IFRS - (unaudited) UK GAAP Share-based Leases Amortisation payments Â£000 Â£000 Â£000 Â£000 Revenue 22,666 - - - Cost of sales (14,116) - - - __________ __________ _________ __________ Gross profit 8,550 - - - Net administrative (5,924) (243) 27 - expenses before amortisation Amortisation (1,535) - - 1,395 Total administrative (7,459) (243) 27 1,395 expenses __________ __________ _________ __________ Operating profit 1,091 (243) 27 1,395 __________ __________ _________ __________ Share of associates' 294 - - 76 operating profit Income from investments 1,098 - - - Finance costs (256) - - - __________ __________ _________ __________ Profit on ordinary 2,227 (243) 27 1,471 activities before taxation Tax on profit on ordinary (1,077) - - - activities __________ __________ _________ __________ Profit for the period 1,150 (243) 27 1,471 __________ __________ _________ __________ Attributable to: Equity holders of the 1,150 (243) 27 1,471 parent Minority interests - - - - __________ __________ _________ __________ 1,150 (243) 27 1,471 __________ __________ _________ __________ Earnings per share Basic 0.4 (0.1) - 0.5 Diluted 0.4 (0.1) - 0.5 __________ __________ _________ __________ Associates Tax Adjustment Deferred tax IFRS Â£000 Â£000 Â£000 Â£000 Revenue - - - 22,666 Cost of sales - - - (14,116) __________ __________ _________ __________ Gross profit - - - 8,550 Net administrative - - - (6,140) expenses before amortisation Amortisation - - - (140) Total administrative - - - (6,280) expenses __________ __________ _________ __________ Operating profit - - - 2,270 __________ __________ _________ __________ Share of associates' (278) - - 92 operating profit Income from investments - - - 1,098 Finance costs - - - (256) __________ __________ _________ __________ Profit on ordinary (278) - - 3,204 activities before taxation Tax on profit on ordinary 278 (328) 223 (904) activities __________ __________ __________ __________ Profit for the period - (328) 223 2,300 __________ __________ _________ __________ Attributable to: Equity holders of the - (328) 223 2,300 parent Minority interests - - - - __________ __________ _________ __________ - (328) 223 2,300 __________ __________ _________ __________ Earnings per share Basic - (0.1) 0.1 0.8 Diluted - (0.1) 0.1 0.8 __________ _________ _________ _________ Reconciliation of Balance Sheet at 31 March 2005 from UK GAAP to IFRS - (unaudited) UK GAAP Leases Intangible Amortisation Deferred tax assets Â£000 Â£000 Â£000 Â£000 Â£000 Fixed assets Goodwill 30,459 - (1,590) 1,534 477 Other intangible assets 85 - 2,217 (139) - Property, plant & 1,808 - (627) - - equipment Investments in associates 1,161 - - 76 - Venue advances and other 2,698 - - - - loans Deferred tax asset 251 - - - 958 _________ _______ _________ _________ _________ 36,462 - - 1,471 1,435 Current assets Debtors due within one 22,643 - - - - year Cash and cash equivalents 38,009 - - - - _________ _______ _________ _________ _________ 60,652 - - - - Total assets 97,114 - - 1,471 1,435 Current liabilities Trade and other payables (51,953) - - - - _________ _______ _________ _________ _________ (51,953) - - - - Non-current liabilities Provisions for liabilities (1,749) (748) - - - and charges Deferred tax liabilities - - - - (484) _________ _______ _________ _________ _________ (1,749) (748) - - (484) Total liabilities (53,702) (748) - - (484) _________ _________ _________ _________ _________ Net assets 43,412 (748) - 1,471 951 _________ _______ _________ _________ _________ Capital and reserves Called-up share capital 2,887 - - - - Share premium account 29,877 - - - - Merger reserve 2,746 - - - - ESOT reserve (3,580) - - - - Profit and loss account 11,254 (748) - 1,471 951 _________ _________ _________ _________ _________ Equity attributable to 43,184 (748) - 1,471 951 equity holders of the parent _________ _______ _________ _________ _________ Minority interests 228 - - - - _________ _______ _________ _________ _________ Total equity 43,412 (748) - 1,471 951 _________ _______ _________ _________ _________ Holiday pay Dividends Tax Adjustment IFRS Â£000 Â£000 Â£000 Â£000 Fixed assets Goodwill - - - 30,880 Other intangible assets - - - 2,163 Property, plant & equipment - - - 1,181 Investments in associates - - - 1,237 Venue advances and other loans - - - 2,698 Deferred tax asset - - - 1,209 _______ _______ _________ _________ - - - 39,368 Current assets Debtors due within one year - - - 22,643 Cash and cash equivalents - - - 38,009 _______ _______ _________ _________ - - - 60,652 Total assets - - - 100,020 Current liabilities Trade and other payables (122) 2,544 (328) (49,859) _______ _______ _________ _______ (122) 2,544 (328) (49,859) Non-current liabilities Provisions for liabilities and charges - - - (2,497) Deferred tax liabilities - - - (484) _______ _______ _________ _______ - - - (2,981) Total liabilities (122) 2,544 (328) (52,840) _________ _________ _________ _______ Net assets (122) 2,544 (328) 47,180 _______ _______ _________ _________ Capital and reserves Called-up share capital - - - 2,887 Share premium account - - - 29,877 Merger reserve - - - 2,746 ESOT reserve - - - (3,580) Profit and loss account (122) 2,544 (328) 15,022 _______ _________ _________ _______ Equity attributable to equity holders (122) 2,544 (328) 46,952 of the parent _______ _______ _________ _______ Minority interests - - - 228 _______ _______ _________ _______ Total equity (122) 2,544 (328) 47,180 _______ _______ _________ _______ Financial Calendar Interim dividend Record date 2 June 2006 Payment date 22 June 2006 Final dividend Record date January 2007 Payment date March 2007 This information is provided by RNS The company news service from the London Stock Exchange

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