Interim Results

RNS Number : 9991L

ITE Group PLC

17 May 2010

 



ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT

Positioned for growth

	Six months to 31 March 2010	Six months to 31 March 2009
Volume sales	203,600 m2	188,600 m2
Revenue	£39.2m	£43.2m
Pre-tax profit	£5.6m	£11.1m
Headline pre-tax profit*	£6.4m	£13.3m
Headline pre-tax profit excluding foreign exchange**	£8.5m	£9.4m
Diluted earnings per share	1.7p	3.4p
Headline diluted earnings per share***	2.0p	4.0p
Interim dividend per share	1.7p	1.6p
Net cash	£29.7m	£25.3m

·      Headline pre-tax  profit excluding foreign exchange differences of £8.5m (2009: £9.4m)

·      Acquisitions in India, Ukraine and Russia strengthen the Group's event portfolio  and expand market coverage

·      Six events in Turkey acquired from former associate

·      Strong cash flow and net cash as at 31 March 2010 of £29.7m to support further investment

·      £98.1m of revenue booked for the full year - (£103.3m this time last year)

·      Dividend increased by 0.1p  to 1.7p

Russell Taylor, CEO of ITE Group plc, commented:

"The exhibition industry is late cycle in its response to the economic environment.  As expected, the first half was challenging as the Group traded through the low-point in the economic cycle and our events reflected the full impact of the recession.  The Group has remained focused on the delivery of high-quality events whilst continuing to manage costs, which has helped the gross margin increase by 1% despite a decline in revenues of 9%.  The Group continues to invest in new events, to grow market share and expand its footprint in emerging markets. More recently sentiment has begun to improve slowly with local exhibitors returning, most significantly in Moscow, and signs of international exhibitors returning in larger numbers for our late summer and autumn events.

As at 14 May 2010, ITE had revenue of £98.1m booked for this financial year compared to £103.3m booked at the same time last year.  ITE's principal markets have significant long-term growth potential and events remain the primary route to market for many of our customers.  The Board is confident that ITE is well positioned for growth."

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

** Headline pre-tax profit excluding foreign exchange is defined as Headline pre-tax profit excluding foreign exchange loss/gain on operating activities and loss on derivative financial instruments. 

 ***  Headline diluted earnings per share is calculated using profit before amortization of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions and disposals- see note 8 for details.

Enquiries:

Russell Taylor, Chief Executive Neil Jones, Group Finance Director	ITE Group plc	020 7596 5000
Charles Palmer/James Macey-White/Emma Appleton	Financial Dynamics	020 7831 3113

Financial Performance

Revenues for the first six months of the year were £39.2m, which as expected was circa 10% less than for the same period last year.  Gross profits of £17.1m were 5% less than for the same period last year, but with an improved gross profit margin. Headline profits before foreign exchange differences were £8.5m compared to £9.4m over the same period last year.  Most of last year's comparable result was earned through bookings made in the 'pre-crisis' trading environment.

Headline profits before tax of £6.4m were impacted by a £2.1m foreign exchange charge largely caused by Ruble strength against the Euro and Sterling over the first six months of the year.  This is a partial reversal of the net £3.9m gain reported in last year's first half results which was then caused by the relative weakness of the Ruble against the same currencies. 

Reported profits before tax were £5.6m (2009: £11.1m) and fully diluted earnings per share for the first six months were 1.7p (2009: 3.4p). Cash generated from operations over the first six months was £26.6m (2009: £20.4m), of which, £2.9m has been applied to acquisitions and £5.3m in further loans to venues.  At 31 March 2010, the Group held net cash balances of £29.7m (2009: £25.3m).

Business Development

The Group has continued to implement its strategy of expanding its sector and geographic exposure in emerging markets. Consistent with this strategy, in November ITE acquired 70% of an exhibition organiser in Delhi, India which organises events serving the paper and the metals & mining industries. The Group is now looking at new launch and development opportunities in this market.

ITE has now completed its exit from ITF, its 50% associate venture in Turkey by acquiring half of the associate's events for its own portfolio and selling its shareholding in the associate to its former joint shareholder.  As part of the transaction ITE has secured its venue rights for the foreseeable future.  ITE's portfolio of wholly owned events in Turkey now includes exhibitions in the food, furniture, machinery and gifts sectors.  In total, these exhibitions account for 93,000m² of sales and circa £4.5m of revenue per annum, but the current low sales yield restricts the profit contribution from these events.  Nonetheless, ITE's Turkish business has acquired a new substance and scale in the market. 

On 9 April 2010, ITE's Moscow office acquired Global Expo, a small exhibition business with two events, one serving the meat and dairy industry and the other serving infrastructure suppliers to the construction industry.  These two events which together have annual sales of circa 5,000m² will be complementary to our food and construction industry interests.

On 30 April 2010, the Group acquired the Aqua-therm exhibitions (serving the Heating, Ventilation and Air Conditioning industries) in Ukraine, Kazakhstan and Azerbaijan.  The principal exhibition was held in May in Kyiv, and had sales this year of circa 14,000m².  The Kazakhstan and Azerbaijan exhibitions will supplement the existing sales in this sector already serviced by our autumn construction events in these territories.  ITE already has an existing joint venture to run the Aqua-therm exhibition in Moscow which has proved very successful over the last two years, and this new acquisition will help to build more international sales support in this substantial industry sector. 

The Group continues to look for investments which will broaden its sector spread and its geographic footprint in emerging markets and which offer the scope for an international sales presence.

Dividend

The Board has approved an interim dividend of 1.7p per share (2009: 1.6p per share).  The Board retains a progressive dividend policy.

Trading highlights and review of operations

For events held in the first quarter of the year volume sales were circa 30% less than the equivalent sales for last year, and for events held in the second quarter volume sales were circa 15% lower. Overall like for like volume sales for the first half were 20% down on the same period last year.  More recently new trading patterns have begun to emerge.  Notably, local sales in Moscow have shown signs of improved bookings for future events. Sales in our other Russian-CIS markets are variable with differing results by market and product.  The construction industry outside Moscow mostly remains depressed, but for oil and gas events there are now clear signs that the recovery in oil prices is beginning to improve sentiment. The consumer driven products in our portfolio such as food and travel have proved fairly resilient through the recession.

Over the six months to 31 March 2010, ITE organized 80 events (2009: 91 events). Total square metres sold in the six months were 203,600 (2009: 188,600). A summary of the Group's exhibition business sales and margins is set out below.

	Square metres sold 000's	Revenue* £'m	Gross profit* £'m
First half 2009	188.6	42.5	17.8
Acquisitions	53.4	3.1	0.8
Net Organic change	-38.4	-7.0	-1.7
First half 2010	203.6	38.6	16.9

*Excluding publishing activity

Russia

Overall volume sales in Russia for the first six months of the year were 17% lower than last year.

In Moscow the autumn events, which were largely untroubled in the prior year, all recorded declines as the full impact of the economic recession was reflected in their results. Conversely, events taking place in ITE's second quarter performed relatively well with the Aqua-therm event showing good growth. The Moscow International Travel & Tourism event, which takes place in March, achieved 19,400m², a small decline from the prior year's event of 20,200m².  The performance of this event demonstrates the relative resilience of this sector and the strength of a market leading event. The Moscow team also launched the first of a series of events in Sochi (South-western Russia), leveraging our expertise outside Moscow, and further events are planned for later in the year.

St Petersburg experienced a decline in volumes of over 30%, with most of its events taking place in the first three months of the year and measured against strong growth in the comparable season last year.  Trading conditions in St Petersburg remained subdued through the second quarter of the financial year.

Novosibirsk experienced similar trading conditions to St Petersburg, but with more events weighted to the second quarter of the financial year, experienced a smaller overall decline in volumes of circa 20% across its portfolio.

Central Asia & the Caucasus

Consistent with trading patterns seen in our other regions, the market in Kazakhstan continued to be affected by the economic recession, again most notably in the first quarter of the financial year.  Overall Kazakhstan reported a 28% fall in like-for-like volume sales for events taking place the first six months of the year. The Kazakhstan Oil and Gas Exhibition & Conference is one of the Group's ten most profitable events and takes place each October. Exhibition space sales of 7,900m²were down 23% compared to last year's event and conference revenues were similarly affected, both reflecting the changed trading environment.

In Azerbaijan and Uzbekistan which exhibited good growth this time last year, there were smaller reductions in sales volumes and some more positive highlights to report.  The Turkmenistan Oil & Gas exhibition and conference continued to grow strongly and the Group has now launched a supporting second event for the market aimed at the Gas sector. In Azerbaijan, the long awaited new exhibition centre is now complete and will be officially opened in time to hold our flagship Caspian Oil & Gas exhibition and conference on 1 June 2010.

Eastern & Southern Europe

In Turkey the Group successfully acquired half the assets of ITF, the Group's former associate company, giving ITE 100% control of six exhibitions. Full ownership presents ITE with the opportunity to influence and improve development of these events, particularly the international participation. The first event held under our direct control was IMOB, a furniture exhibition held in February, which sold 46,100m², a small increase on the previous event. Overall Turkey has been less severely affected by the global recession than other territories and the Eastern Mediterranean Travel and Tourism event which was acquired in January 2009, performed well reporting good revenue growth on a marginal space decline.

In 2009 the Ukrainian economy suffered a 15% reduction in Gross Domestic Product as a result this exhibition market was the most severely affected of ITE's territories in the first half of the year.  The region reported a decline of nearly 50% in sales volumes in comparison to the prior year though this is against strong comparatives for the prior year.  A large part of the shortfall came from the low yielding Agrihort event and profits were not proportionately affected.  As previously annouced the Group acquired Kyiv Aqua-therm on 30 April 2010.  This event is the market leader in its sector in Ukraine and is well positioned to grow with a recovery in the Ukrainian economy.

UK and Rest of the World

MODA, our leading UK fashion event, successfully launched MODA Lingerie at the spring event held in February at the NEC in Birmingham. The new sector which added around 2,000m² to the event helped MODA to increase volumes and revenue by over 10%. The addition of this new sector was well received by exhibitors and visitors alike and reinforces the market leading position of ITE's fashion brand among mid-market independent fashion retailers.

In India the newly acquired subsidiary made an excellent start with a successful edition of its leading event Paperex which serves the domestic paper mill industry and sold over 7,300 m².  The Group is now focused on evaluating new launch and development opportunities in this market.

April 2010 trading

April's trading was in line with our expectations and the sales performance of the principal events taking place in April is set out below.

	April 2010	April 2009
Mosbuild	62,700m2	74,900m2
Interstroyexpo	6,400m2	9,500m2
TransRussia	7,500m2	7,300m2
Expo-Electronica	5,100m2	5,300m2

Outlook

As at 14 May 2010, the Group had booked sales for the financial year of £98.1m (2009 £103.3m).  On a like-for-like basis, volume sales for the full financial year are circa 10% below the comparable figure for last year, though most of the like-for-like shortfall is attributable to events which took place in the first six months.

Trading conditions in our biggest market, Moscow, have turned more positive recently and this is reflected in local sales figures for future events; other Russian and some CIS markets are lagging Moscow's recovery. ITE's market leading events have weathered the recession well and are now operating in a landscape of reduced competition, creating opportunities for the Group to continue to expand its business.  The financial position of the Group remains strong and after completing the April acquisitions referred to earlier the Group has cash balances of over £14m at 14 May 2010.  With indications of an improvement in our markets and the significant longer term growth prospects the Board is confident that ITE is well positioned for growth. 

Going Concern

As stated in note 15 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 2010

		Six months to 31 March 2010		Six months to 31 March 2009		Year ended 30        September 2009
		Unaudited		Unaudited		Audited
	Notes	£000		£000		£000
Continuing operations
Revenue		39,225		43,230		116,730
Cost of sales		(22,175)		(25,280)		(56,432)
		__________		__________		__________
Gross profit		17,050		17,950		60,298
Other operating income		144		141		283
Administrative expenses before amortisation		(9,044)		(9,603)		(17,914)
Amortisation of acquired intangibles      Foreign exchange (loss)/gain on operating   activities		(2,080) (2,063)		(2,108) 5,095		(4,311) 3,922
Total administrative expenses		(13,187)		(6,616)		(18,303)
Share of results of associate		126		638		663
		__________		__________		__________
Operating profit		4,133		12,113		42,941
Gain on disposal of associate	9	834		-		-
Investment revenue	3	864		438		619
Finance costs	4	(245)		(1,407)		(2,108)
		__________		__________		__________
Profit on ordinary activities before taxation	5	5,586		11,144		41,452
Tax on profit on ordinary activities	6	(1,452)		(3,120)		(10,790)
		__________		__________		__________
Profit for the period		4,134		8,024		30,662
		__________		__________		__________
Attributable to:
Owners of the Company		4,104		8,083		30,435
Non-controlling interests		30		(59)		227
		__________		__________		__________
		4,134		8,024		30,662
		__________		__________		__________
Earnings per share (p)
Basic	8	1.7		3.4		12.8
Diluted	8	1.7		3.4		12.7
		__________		__________		__________

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

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2010

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Profit for the period attributable to shareholders	4,134	8,024	30,662
Cash flow hedges: Gains/losses during the period	1,418	(4,203)	(1,745)
Exchange differences on translation of foreign operations	4,808	(3,801)	(1,254)
Put option at fair value	(2,065)	(1,354)	(1,351)
	__________	__________	__________
	8,295	(1,334)	26,312
	__________	__________	__________
Tax relating to components of comprehensive income	-	(175)	13
Total comprehensive income for the period	8,295	(1,509)	26,325
Attributable to:
Owners of the Company	8,265	(1,450)	26,098
Non-controlling interests	30	(59)	227
	__________	__________	__________
	8,295	(1,509)	26,325
	__________	__________	__________

Condensed Consolidated Statement of Changes in Equity

31 March 2010

		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 2009		2,481		2,678		2,746		457		(10,241)		60,519		(4,620)		2,160		(1,745)		54,435	2,272		56,707
Net profit for the period		-		-		-		-		-		4,104		-		-		-		4,104	30		4,134
Currency translation difference on net investment in subsidiary undertakings		-		-		-		-		-		-		-		4,808		-		4,808	-		4,808
Increase  in fair value of hedging derivatives		-		-		-		-		-		-		-		-		1,418		1,418	-		1,418
Put option on acquisition of subsidiary		-		-		-		-		-		-		(2,065)		-		-		(2,065)	-		(2,065)
Total comprehensive income for the period		-		-		-		-		-		4,104		(2,065)		4,808		1,418		8,265	30		8,295
Issue of share capital		2		-		-		-		-		-		-		-		-		2	-		2
Dividends paid		-		-		-		-		-		(9,283)		-		-		-		(9,283)	(244)		(9,527)
Exercise of options		-		-		-		-		502		(183)		-		-		-		319	-		319
Share-based payments		-		20		-		-		-		654		-		-		-		674	-		674
Non controlling interest on acquisition of subsidiary		-		-		-		-		-		-		-		-		-		-	49		49
Balance as at 31 March 2010		2,483		2,698		2,746		457		(9,739)		55,811		(6,685)		6,968		(327)		54,412	2,107		56,519
	Share Capital		Share Premium Account		Merger Reserve		Capital Redemption Reserve		ESOT Reserve		Retained Earnings Restated		Put Option Reserve		Translation Reserve		Hedge Reserve		Total			Non Controlling interests		Total Equity
	£000		£000		£000		£000		£000		£000		£000		£000		£000		£000			£000		£000
Balance as at 1 October 2008	2,479		2,669		2,746		457		(8,390)		42,776		(3,269)		3,414		-		42,882			1,194		44,076
Effect of change in accounting policy	-		-		-		-		-		(90)		-		-		-		(90)			-		(90)
	2,479		2,669		2,746		457		(8,390)		42,686		(3,269)		3,414		-		42,792			1,194		43,986
As restated
Net profit for the period	-		-		-		-		-		8,083		-		-		-		8,083			(59)		8,024
Currency translation difference on net investment in subsidiary undertakings	-		-		-		-		-		-		-		(4,378)		-		(4,378)			-		(4,378)
Increase  in fair value of hedging derivatives	-		-		-		-		-		-		-		-		(3,021)		(3,021)			-		(3,021)
Put option on acquisition of subsidiary	-		-		-		-		-		-		(1,354)		-		-		(1,354)			-		(1,354)
Other comprehensive income for the period	-		-		-		-		-		(32)		-		-		-		(32)					(32)
Total comprehensive income for the period	-		-		-		-		-		8,051		(1,354)		(4,378)		(3,021)		(702)			(59)		43,225
Issue of share capital	2		-		-		-		-		-		-		-		-		2			-		2
Dividends paid	-		-		-		-		-		(8,809)		-		-		-		(8,809)			-		(8,809)
Exercise of options	-		-		-		-		-		(817)		-		-		-		(817)			-		(817)
Share-based payments	-		9		-		-		-		651		-		-		-		660			-		660
Deferred tax charged to equity	-		-		-		-		-		(175)		-		-		-		(175)			-		(175)
Purchase of shares	-		-		-		-		(2,375)		-		-		-		-		(2,375)			-		(2,375)
Recognition and transfer of cash flow hedgers	-		-		-		-		-		-		-		-		(1,182)		(1,182)			-		(1,182)
Non controlling interest on acquisition of subsidiary	-		-		-		-		-		-		-		-		-		-			851		851
Balance as at 31 March 2009	2,481		2,678		2,746		457		(10,795)		41,587		(4,623)		(964)		(4,203)		29,394			1,986		31,380

	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings Restated	Put Option Reserve	Translation Reserve	Hedge Reserve	Total	Non Controlling interests	Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Balance as at 1 October 2008	2,479	2,669	2,746	457	(8,390)	42,776	(3,269)	3,414	-	42,882	1,194	44,076
Effect of change in accounting policy	-	-	-	-	-	(90)	-	-	-	(90)	-	(90)
As restated	2,479	2,669	2,746	457	(8,390)	42,686	(3,269)	3,414	-	42,792	1,194	43,986
Net profit for the period	-	-	-	-	-	30,435	-	-	-	30,435	227	30,662
Currency translation difference on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(1,254)	-	(1,254)	-	(1,254)
Increase  in fair value of hedging derivatives	-	-	-	-	-	-	-	-	(563)	(563)	-	(563)
Put option on acquisition of subsidiary	-	-	-	-	-	-	(1,351)	-	-	(1,351)	-	(1,351)
Total comprehensive income for the period	-	-	-	-	-	30,435	(1,351)	(1,254)	(563)	27,267	227	27,494
Issue of share capital	2	-	-	-	-	-	-	-	-	2	-	2
Dividends paid	-	-	-	-	-	(12,600)	-	-	-	(12,600)	-	(12,600)
Exercise of options	-	-	-	-	1,318	(1,115)	-	-	-	203	-	203
Share-based payments	-	9	-	-	-	1,100	-	-	-	1,109	-	1,109
Deferred tax charged to equity	-	-	-	-	-	13	-	-	-	13	-	13
Shares issued for remuneration	-	-	-	-	24	-	-	-	-	24	-	24
Purchase of shares	-	-	-	-	(3,193)	-	-	-	-	(3,193)	-	(3,193)
Recognition and transfer of cash flow hedgers	-	-	-	-	-	-	-	-	(1,182)	(1,182)	-	(1,182)
Non controlling interest on acquisition of subsidiary	-	-	-	-	-	-	-	-	-	-	851	851
Balance as at 31 September 2009	2,481	2,678	2,746	457	(10,241)	60,519	(4,620)	2,160	(1,745)	54,435	2,272	56,707

Condensed Consolidated Balance Sheet

31 March 2010 

		31 March 2010	31 March 2009	30 September 2009
		Unaudited	Unaudited	Audited
	Notes	£000	£000	£000
Non-current assets
Goodwill		49,160	42,926	44,619
Other intangible assets		18,666	17,495	16,007
Property, plant & equipment		1,480	1,578	1,449
Investments in associates		-	1,793	1,840
Venue advances and other loans		6,362	1,444	1,994
Deferred tax asset		1,115	1,330	1,268
Derivative financial instruments	11	229	-	68
		___________	___________	___________
		77,012	66,566	67,245
Current assets
Trade and other receivables		34,778	31,386	33,859
Tax prepayment		1,418	391	1,056
Cash and cash equivalents		38,247	31,567	32,587
Derivative financial instruments	11	663	-	226
		___________	___________	___________
		75,106	63,344	67,728
Total assets		152,118	129,910	134,973
Current liabilities
Bank overdraft	10	(8,530)	(6,275)	(9,480)
Trade and other payables		(12,495)	(12,848)	(13,395)
Derivative financial instruments	11	(3,097)	(7,760)	(5,020)
Deferred income		(62,291)	(65,180)	(44,567)
Provisions		(258)	(700)	(203)
		___________	___________	___________
		(86,671)	(92,763)	(72,665)
Non-current liabilities
Provisions		(640)	(546)	(610)
Deferred tax liabilities		(4,294)	(3,602)	(4,134)
Derivative financial instruments	11	(3,994)	(1,619)	(857)
		___________	___________	___________
		(8,928)	(5,767)	(5,601)
Total liabilities		(95,599)	(98,530)	(78,266)
		___________	___________	___________
Net assets		56,519	31,380	56,707
		___________	___________	___________

		31 March 2010	31 March 2009	30 September 2009
		Unaudited	Unaudited	Audited
Equity
Share capital	12	2,483	2,481	2,481
Share premium account		2,698	2,678	2,678
Merger reserve		2,746	2,746	2,746
Capital redemption reserve		457	457	457
ESOT reserve		(9,739)	(10,765)	(10,241)
Retained earnings		55, 811	41,587	60,519
Translation reserve		6,968	(964)	2,160
Hedge reserve		(327)	(4,203)	(1,745)
Put option reserve		(6,685)	(4,623)	(4,620)
		___________	___________	___________
Equity attributable to equity holders of the parent		54,412	29,394	54,435
Non-controlling interest		2,107	1,986	2,272
		___________	___________	___________
Total equity		56,519	31,380	56,707
		___________	___________	___________

Condensed Consolidated Cash Flow Statement

For the six months ended 31 March 2010

		Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
		Unaudited	Unaudited	Audited
		£000	£000	£000
Cash flows from operating activities
Operating profit from continuing operations		4,133	12,113	42,941
Adjustments for:
Depreciation and amortisation		2,415	2,543	5,062
Share-based payments		654	650	1,100
Other non-cash expenses		(34)	(169)	121
Share of associate profit		(126)	(638)	(663)
Increase/(decrease) in provisions		3,223	546	(105)
		__________	__________	__________
Operating cash flows before movements in working capital		10,265	15,045	48,456
Decrease/(increase) in receivables		(701)	9,216	7,956
Increase in deferred income		17,724	778	(19,835)
(Decrease)/increase in payables		190	(4,595)	775
		__________	__________	__________
Cash generated from operations		27,478	20,444	37,352
Tax paid		(2,305)	(4,777)	(11,887)
Venue advances and loans		(5,291)	(1,912)	(5,352)
		__________	__________	__________
Net cash from operating activities		19,882	13,755	20,113
Investing activities
Interest received		131	438	619
Derivative financial instruments		94	-	(1,696)
Dividends received from associates		637	208	204
Acquisition of business		(2,867)	(6,886)	(8,012)
Purchase of property, plant & equipment, computer software and other intangibles		(541)	(346)	(449)
		__________	__________	__________
Net cash used in investing activities		(2,546)	(6,586)	(9,334)
Financing activities
Dividends paid		(9,283)	(8,751)	(12,600)
Interest paid		(239)	(216)	(412)
Net cash flow in relation to ESOT shares		-	(3,769)	(3,193)
Proceeds from issue of share capital		22	12	11
		__________	__________	__________
Net cash outflows from financing activities		(9,500)	(12,724)	(16,194)
Net (decrease)/increase in cash and cash equivalents		(7,836)	(5,555)	(5,415)
Net cash and cash equivalents at beginning of period		23,107	29,141	29,141
Effect of foreign exchange rates		(1,226)	1,706	(619)
		__________	__________	__________
Net cash and cash equivalents at end of period		29,717	25,292	23,107
		__________	__________	__________
		Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
		Unaudited	Unaudited	Audited
		£000	£000	£000
Cash flows from operating activities
Operating profit from continuing operations		4,133	12,113	42,941
Adjustments for:
Depreciation and amortisation		2,415	2,543	5,062
Share-based payments		654	650	1,100
Other non-cash expenses		(34)	(169)	121
Share of associate profit		(126)	(638)	(663)
Increase/(decrease) in provisions		3,223	546	(105)
		__________	__________	__________
Operating cash flows before movements in working capital		10,265	15,045	48,456
Decrease/(increase) in receivables		(701)	9,216	7,956
Increase in deferred income		17,724	778	(19,835)
(Decrease)/increase in payables		190	(4,595)	775
		__________	__________	__________
Cash generated from operations		27,478	20,444	37,352
Tax paid		(2,305)	(4,777)	(11,887)
Venue advances and loans		(5,291)	(1,912)	(5,352)
		__________	__________	__________
Net cash from operating activities		19,882	13,755	20,113
Investing activities
Interest received		131	438	619
Derivative financial instruments		94	-	(1,696)
Dividends received from associates		637	208	204
Acquisition of business		(2,867)	(6,886)	(8,012)
Purchase of property, plant & equipment, computer software and other intangibles		(541)	(346)	(449)
		__________	__________	__________
Net cash used in investing activities		(2,546)	(6,586)	(9,334)
Financing activities
Dividends paid		(9,283)	(8,751)	(12,600)
Interest paid		(239)	(216)	(412)
Net cash flow in relation to ESOT shares		-	(3,769)	(3,193)
Proceeds from issue of share capital		22	12	11
		__________	__________	__________
Net cash outflows from financing activities		(9,500)	(12,724)	(16,194)
Net (decrease)/increase in cash and cash equivalents		(7,836)	(5,555)	(5,415)
Net cash and cash equivalents at beginning of period		23,107	29,141	29,141
Effect of foreign exchange rates		(1,226)	1,706	(619)
		__________	__________	__________
Net cash and cash equivalents at end of period		29,717	25,292	23,107
		__________	__________	__________

		31 March 2010	31 March 2009	30 September 2009
		Unaudited	Unaudited	Audited
		£000	£000	£000
Comprised of:
Cash and cash equivalents		38,247	31,567	32,587
Bank overdrafts		(8,530)	(6,275)	(9,480)
		__________	__________	__________
		29,717	25,292	23,107
		__________	__________	__________

Notes to the Interim Financial Statement

1. General Information and basis of preparation

The information for the year ended 30 September 2009 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 2010. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2009 except as described below.

Impact of new accounting standards

IFRS 8, Operating Segments

IFRS 8 sets out disclosure requirements concerning an entity's reportable segments, products, services, geographical areas in which it operates and its major customers. IFRS 8 replaces IAS 14, Segmental Reporting. The Group has not been significantly impacted by the adoption of this standard, see note 2 for further details.  

Amendment to IFRS 3, Business Combinations (revised 2008) and IAS 27 Consolidated and Separate Financial Statements (revised 2008)

The most significant changes to the Group's previous accounting policies for business combinations are as follows:

-       Acquisition related costs which previously would have been included in the cost of a business combination are included in administrative expenses as they are incurred;

-       Any pre-existing equity interest in the entity acquired is remeasured to the fair value at the date of obtaining control, with any resulting gain or loss recognised in profit and loss;

-       Any changes in the Group's ownership interest subsequent to the date of obtaining control are recognised directly in equity, with no adjustment to goodwill; and

-       Any changes to the cost of an acquisition, including contingent consideration, resulting from events after the date of acquisition are recognised in profit and loss.  Previously, such changes resulted in an adjustment to goodwill.

The revised standards have been applied to the acquisitions set out in note 9. 

Any adjustments to contingent consideration for acquisitions made prior to 1 October 2009 which result in an adjustment to goodwill continue to be accounted for under IFRS 3(2004) and IAS 27(2005), for which accounting policies can be found in the Group's latest audited financial statements.

£243,000 of transaction costs relating to acquisitions made in the period have been expensed that would previously have been capitalised on the balance sheet (see note 5).      

Amendment to IAS 1, Presentation of Financial Statements

This amendment introduces changes to the way in which movements in equity must be disclosed and requires an entity to disclose each component of other comprehensive income not recognised in profit and loss. The amendment also requires disclosure of the amount of income tax relating to each component of other comprehensive income as well as other minor disclosure amendments.

2. Segmental information

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

IFRS 8 introduces the term Chief Operating Decision Maker (CODM). The Executive Board comprising the Executive Directors  (Russell Taylor (Chief Executive Officer), Neil Jones (Financial Director), Edward Strachan (Executive Director)), Stephen Keen, Alexander Shtalenkov, Michael Johannes, Colette Tebbutt and Suzanne King is considered to be the CODM.

ITE's reportable segments are strategic business units that are based in different geographic locations, predominantly in the developing and emerging markets.  Each business unit is managed separately and has a different marketing strategy as determined by the local management. The products and services offered by each business unit are identical across the group.  

Each reportable segment derives its revenue through the organization of exhibitions and conferences.  The principal business at each unit is organization of B2B trade exhibitions, which accounts for over 95% of the Group's revenue. Consumer exhibitions account for 1% of ITE's revenue, conferences circa 3% and other activities relating to the core exhibition business (mostly publishing) account for 1% of revenue.  As an exhibition organizer, each business unit is responsible for hiring venues at which it stages its events and for marketing the events to both the exhibitors and visitors.

ITE Group evaluates performance on the basis of profit or loss from operations before tax expense not including non-recurring gains and losses and foreign exchange gains and losses.

Six months ended 31 March 2010 Unaudited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	4,047	9,588	16,730	7,763	1,096	39,225
Result	(5,814)	4,292	3,405	2,200	(76)	4,007
	________	________	______	________	______	______
By origin of sale
Revenue	17,765	3,853	9,940	6,496	1,170	39,225
Result	2,767	1,190	(1,066)	740	376	4,007
	_______	______	______	_______	______
Share of results of associates						126
						______
Operating profit
Gain on disposal of associate						834
Finance income						864
Finance costs						(245)
						_______
Profit before tax						5,586
Tax						(1,452)
						_______
Profit after tax						4,134
						________
Capital expenditure	200	52	168	84	2	506
Depreciation and amortisation	1,632	53	1,490	328	3	2,506
Balance Sheet
Assets *	70,650	8,462	59,316	7,624	3,532	149,584
	_______	_______	_______	_______	_______
Investment in associates						-
						_______
Consolidated total assets						149,584
						________
Liabilities *	44,803	4,340	32,850	3,767	2,853	88,644
	________	________	________	________	________	_______

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

The revenue in the period of £39.2 million includes £0.2 million of barter sales.

Six months ended 31 March 2009 Unaudited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	3,703	10,561	20,620	8,200	146	43,230
Result	(5,502)	4,222	9,787	3,022	(54)	11,475
	________	______	______	________	______	______
By origin of sale
Revenue	21,742	4,767	11,991	4,730	-	43,230
Result	878	1,096	8,473	1,165	(137)	11,475
	_______	______	______	_______	______
Share of results of associates						638
						_______
Operating profit						12,113
Finance income						438
Finance costs						(1,407)
						_______
Profit before tax						11,144
Tax						(3,120)
						_______
Profit after tax						8,024
						______
Capital expenditure	262	39	28	17	-	346
Depreciation and amortisation	975	15	1,249	304	-	2,543
Balance Sheet
Assets *	67,351	6,912	45,510	6,619	4	126,396
	_______	______	______	_______	______
Investment in associates						1,793
						_______
Consolidated total assets						128,189
						________
Liabilities *	54,074	4,788	29,542	4,604	153	93,161
	________	______	______	________	______	______

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

The revenue in the period of £43.2 million includes £0.1 million of barter sales.

Year ended 30 September 2009 Audited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	7,016	19,031	80,863	9,585	235	116,730
Result	(6,188)	6,451	39,731	3,473	(1,189)	42,278
	________	______	______	________	______	______
By origin of sale
Revenue	57,002	9,092	44,833	5,803	-	116,730
Result	16,752	2,570	22,445	669	(158)	42,278
	_______	______	______	_______	______
Share of results of associates						663
						______
Operating profit						42,941
Finance income						619
Finance costs						(2,108)
						_______
Profit before tax						41,452
Tax						(10,790)
						_______
Profit after tax						30,662
						______
Capital expenditure	223	28	163	35	-	449
Depreciation and amortisation	1,868	6	2,432	756	-	5,062
Balance Sheet
Assets**	74,081	7,941	46,912	1,875	-	130,809
	________	______	______	________	______
Investment in associates						1,840
						_______
Consolidated total assets						132,649
						______
Liabilities**	46,116	3,914	19,490	1,939	196	71,655
	________	______	______	________	______	______
**  Segment assets and segment liabilities exclude current and deferred tax assets and liabilities.

The revenue in the year of £116.7 million includes £0.5 million of barter sales.

3.         Investment revenue

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Interest receivable from bank deposits	131	420	619
Interest receivable on advances to venues	-	15	-
Unwind of fair value discount on venue advances	-	3	-
Gain on derivative financial instruments	100	-	-
Gain on revaluation of Primexpo North West LLC put option	633	-	-
	__________	__________	__________
	864	438	619
	__________	__________	__________

4.  Finance costs

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Interest on bank loans and overdrafts	108	99	148
Bank charges	131	117	264
Loss on derivative financial instruments	6	1,191	1,696
	__________	__________	__________
	245	1,407	2,108
	__________	__________	__________

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

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Profit on ordinary activities before taxation	5,586	11,144	41,452
Amortisation of acquired intangibles	2,080	2,108	4,311
Gain on revaluation of Primexpo North West LLC put option	(633)	-	-
Gain on disposal of associate	(834)	-	-
Transaction costs	243	-	-
	__________	__________	__________
Headline pre-tax profit	6,442	13,252	45,763
	__________	__________	__________

 

6.         Taxation

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax
UK corporation tax	2,019	514	4,918
Foreign tax	108	2,621	5,821
	__________	__________	__________
	2,127	3,135	10,739
Deferred tax	(675)	(15)	51
	__________	__________	__________
Tax on profit on ordinary activities	1,452	3,120	10,790
	__________	__________	__________

Tax rate at the interim is charged at 26% (2009: 28%) representing the best estimate of the weighted average annual corporation tax expected for the financial year.

 

7.  Dividends

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Unaudited	Unaudited	Audited
	£000	£000	£000
Final dividend for the year ended 30 September 2009 of 3.9p (2008: 3.7p) per ordinary share	9,238	8,809	8,809
	__________	__________	__________
	-
Interim dividend for the year ended 30 September 2009 of 1.6p per ordinary share	-	-	3,791
Proposed interim dividend for the year ending 30 September 2010 of 1.7p (2009: 1.6p)  per ordinary share	4,051	3,791	-
	__________	__________	__________

The proposed interim dividend was approved by the Board on 13 May 2010 and has not been included as a liability as at 31 March 2010.

8.         Earnings per share

The calculations of earnings per share from continuing operations are based on the following results and numbers of shares.

	Headline diluted			Basic and diluted
	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	£000	£000	£000	£000	£000	£000
Profit for the financial period attributable to equity holders of the parent	4,104	8,083	30,435	4,104	8,083	30,435
Amortisation of acquired intangibles	2,080	2,108	4,311	-	-	-
Tax effect of amortisation	(501)	(544)	(848)	-	-	-
Transactional  costs	243	-	-	-	-	-
Gain on revaluation of Primexpo North West LLC put option	(633)	-	-	-	-	-
Gain on disposal of associate	(834)	-	-	-	-	-
Tax effect of other adjustments	318	-	-	-	-	-
	________	________	________	______	______	________
	4,777	9,647	33,898	4,104	8,083	30,435
	________	________	________	________	________	________

	Six months to 31 March 2010	Six months to 31 March 2009	Year ended 30 September 2009
	Number of shares ('000)	Number of shares ('000)		Number of shares ('000)
Weighted average number of shares:
For basic earnings per share	237,825	239,023	238,030
Dilutive effect of exercise of share options	1,988	1,172	1,352
For diluted earnings per share	239,813	240,195	239,382

Headline diluted earnings per share is intended to provide a consistent measure of Group earnings on a year on year basis.

Headline diluted earnings per share is calculated using profit attributable to equity holders of the parent for the financial year before amortization of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions and disposals.

9. Acquisition of business

On 27 November 2009 the Group purchased 70% of Airgate Holdings Limited, a Cypriot company, which in turn owns 100% of the shares in Expomedia Events India Private Limited and Tafcon ExpoMedia India Private Limited and 50% of the shares of Tafcon Expomedia International Private Limited.

A cash consideration of €2.2 million (£2.0 million) was paid on the 27 November 2009. A further amount of €0.3 million in deferred consideration was paid in April 2010.   

The acquisition of these companies is consistent with ITE's strategy of expanding its business model into new geographies.

In addition a put option has been recognised - see note 11 for further details.

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

9.         Acquisition of business (continued)

	Airgate Holdings Limited Consolidated Results
Net assets acquired	£'000
Fixed assets Intangible fixed assets	6 2,242
Cash	387
Trade and other receivables	629
Trade and other payables	(1,397)
Provisions	(76)
Deferred tax liability	(489)
Non-controlling interest	(49)
	__________
Net assets acquired	1,253
Goodwill arising on acquisition	998
	__________
Total cost of acquisition	2,251
	__________
Satisfied by: Net cash paid	2,014
Deferred consideration	237
	__________
	2,251
	__________
Net cash outflow arising on acquisition: Net cash paid	2,014
Cash and cash equivalents acquired	(387)
	__________
	1,626
	__________

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 (£1.0m) represents the perceived value placed by the Group of having an established operating position in a new emerging market.

Details of net assets acquired on 27 November 2009 and the related fair value adjustments are presented as follows:

Assets acquired	Book value £000	Adjustments £000	Fair value £000
Fixed assets	6	-	6
Intangible fixed assets	613	1,629	2,242
Cash	387	-	387
Trade and other receivables	629	-	629
Trade and other payables	(1,397)	-	(1,397)
Provisions	(76)	-	(76)
Deferred tax liability	-	(489)	(489)
Non controlling interest	-	(49)	(49)
	_________	___________	___________
Net assets acquired	162	1,091	1,253
	________	___________	___________

The acquired business has contributed £1.2 million to Group revenue and £0.3 million to profit before tax.  If the acquisition had occurred on 1 October 2009 there would have been no material difference to these results.

Acquisition of exhibitions in Turkey

On 31 December 2009, ITE has completed its exit from ITF, it's 50% associate venture in Turkey by  acquiring half of the associates events for its own portfolio and selling its shareholding in the associate to its former joint shareholder.

The following exhibitions were acquired;

IMOB , an International furniture exhibition, held annually in Istanbul

Promoturk ,an exhibition for corporate gifts, stationery and the giftware market held annually in Istanbul  

Ipack, a specialised exhibition for packaging and food processing systems held annually in Istanbul

Gida, an International food products and processing technologies exhibition held annually in Istanbul

Time, a manufacturing technologies exhibition, held in Istanbul

Tatef, an International metalworking technologies exhibition held every two years in Istanbul

The assets acquired are set out in the table below:

Intangible fixed assets	£'000 2,583
Sundry debtors	158
Loans and advances	1,083
Current liabilities	(1,241)
	__________
Net Assets acquired	2,583
	__________

The fair value of the assets acquired is £2.6m and consideration for these was the 50% shareholding the Group held in ITF. This shareholding was previously held on the Group's books at a value of £1.2m and as such gives rise to a gain on disposal of £1.4m. After deducting the respective deferred tax liability, a gain on disposal of £0.8m was recognised; this is shown on the face of the income statement.  

No cash was transferred as part of the transaction.

10.        Bank overdraft

The bank overdraft is repayable on demand. The borrowings are denominated in both Euros and US Dollars. The borrowings are arranged at floating interest rates, thus exposing the Group to cash flow interest risk. The overdraft is taken out to act as a partial hedge against the UK trade receivables in Euros and US Dollars.

11.        Derivative financial instruments

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	£000	£000	£000
Current assets
Foreign currency forward contracts	663	-	226
	___________	___________	___________
	663	-	226
	___________	___________	___________
Non-current assets
Foreign currency forward contracts	229	-	68
	___________	___________	___________
	229	-	68
	___________	___________	___________

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	£000	£000	£000
Current liabilities
Foreign currency forward contracts	61	3,938	-
Put options	3,036	3,822	5,020
	___________	___________	___________
	3,097	7,760	5,020
	___________	___________	___________
Non-current liabilities
Foreign currency forward contracts	681	265	857
Put options	3,313	1,354	-
	___________	___________	___________
	3,994	1,619	857
	___________	___________	___________

Foreign currency derivatives

The Group utilises foreign currency forward contracts to hedge future euro denominated sales made from the UK.  The Group is party to foreign currency forward contracts in the management of its exchange rate exposures.  The instruments purchased are denominated in Euros which represents the Group's primary billing currency. Under the forward contracts, the Group has an obligation to sell Euros for Sterling at specified rates at specified dates. 

As at 31 March 2010 the notional amounts of outstanding foreign currency forward contracts that the Group has committed to are as follows:

Derivative assets

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	€000	€000	€000
Foreign currency forward contracts	33,300	-	45,900
	___________	___________	___________
	33,300	-	45,900
	___________	___________	___________

Derivative liabilities

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	€000	€000	€000
Foreign currency forward contracts	29,900	72,700	18,600
	___________	___________	___________
	29,900	72,700	18,600
	___________	___________	___________

The arrangements as at 31 March 2010 cover exchange exposures over the next 33 months, with €36.1 million covering exposures after September 2010.   These instruments have been designated in effective hedging relationships, with any changes in their fair value being recorded in equity.

At 31 March 2010, the fair value of these derivatives is estimated to be an asset of approximately £0.2 million (31 March 2009: liability of £4.2 million on forward contracts; 30 September 2009: liability of £0.6 million on forward contracts). This is based on market valuations.  This amount has been deferred in equity at 31 March 2010.

Put options

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.

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	£000	£000	£000
Put option for Primexpo North West LLC	3,036	3,822	3,806
Put option for Newex Marketing Limited	1,283	1,354	1,214
Put option for Airgate Holdings Limited	2,030	-	-
	___________	___________	___________
	6,349	5,176	5,020
	___________	___________	___________

12.        Share capital

	Six months to 31 March 2010 Unaudited	Six months to 31 March 2009 Unaudited	Year ended 30 September 2009 Audited
	£000	£000	£000
Authorised
375,000,000 ordinary shares of 1 penny each (31 March 2009: 375,000,000)	3,750	3,750	3,750
	__________	__________	__________
Allotted and fully-paid
248,289,702  ordinary shares of 1 penny each (31 March 2009: 248,107,702)	2,483	2,481	2,481
	__________	__________	__________

During the period, the Company allotted 182,000 (2009: 199,800) ordinary shares of 1 penny each pursuant to the exercise of share options. The total consideration for the shares issued was £154,873 (2009: £11,500).

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

13.        Events after the balance sheet date

On 1st April 2010, the Group completed the purchase of the remaining 25% of Primexpo, the organiser of Interstroyexpo (the leading St. Petersburg construction event), for  €3.4m paid in cash.

On 9th April 2010, the Group completed the purchase of the exhibition assets of Global Expo, a Russian exhibition company based in Moscow, which organises the annual Moscow events Meat and Diary expo and CityBuild. The Group paid an initial consideration of £1.1m, with a further payment of a circa £1m due next March dependent on the performance of the next editions of these events.

On 29th April 2010, the Group paid net €13m cash for Fin-mark Srl, an Italian company which organises the Aqua-therm exhibitions (heating, ventilation and air-conditioning) in Ukraine, Kazakhstan and Azerbaijan. At completion the company had gross assets of circa €2.5m.

Due to the proximity to the date of signing this Interim Management Statement, the IFRS 3 acquisition accounting has not been finalised and the associated IFRS 3 disclosures are therefore to be completed.  

14.        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 2010. There have been no material changes in related party transactions.

Transactions between the Group and its associates, where relevant, are disclosed below.

Trading transactions

In Kazakhstan, ITECA, a Group subsidiary, has transacted with Datacom and Saban Holdings for the provision of web systems and office rental respectively.  Edward Strachan, a Group Director, is a significant shareholder of Datacom and Saban Holdings.  In total, the services charged to ITECA were £9,000 (31 March 2009: £41,366; 30 September 2009: £44,000). 

In St Petersburg, Primexpo, a Group subsidiary, has transacted with Cavalry House for the provision of office rental. Edward Strachan, a Group Director, is a significant shareholder of Cavalry House. In total, the services charged to Primexpo were £104,000 (31 March 2009: £98,100; 30 September 2009: £196,000). 

During the period ended 31 March 2010 consultancy fees of £120,000 (31 March 2009: £120,000; 30 September 2009: £328,000) were paid to Kyzyl Tan Consultants Limited ("Kyzyl Tan"), of which Edward Strachan is a significant shareholder.

15.        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.

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 and ITE is constantly looking at opportunities to diversify further.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Interim Management Report. The financial position of the Group, its cash flows and liquidity position are described in the financial statements and notes. The Group has considerable financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.

Political uncertainty and regulatory risk

The Group's business is principally carried out in Russia and the CIS.  Changes in law or the regulatory environment could have an effect on some or all of the exhibitions of the Group.  ITE has reduced the risk by establishing its business as independent Russian and CIS companies fully contributing to the local economy, and the diversity of businesses across sectors and geography provides protection for the longer-term prospects of the Group.

Commercial relationships

The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future. 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 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 against such an event in the short term.

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, reduce the risk of a competitive threat to the Group's overall business.

People
ITE's employees have long-standing relationships with customers and venues, and a unique knowledge of the exhibitions business.   Loss of key staff to a competitive event could impact the short-term prospects of a specific event or sector. ITE has sought to build loyalty in its staff by ensuring remuneration is competitive and through a wide distribution of the Group's long-term incentive plans. ITE has a good record of retaining its key staff.

Financial risk

The key financial risk to the Group is the movement in foreign currency exchange rates.  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/Euro and Ruble/Sterling exchange rates in relation to the retranslation of foreign denominated assets (principally debtors and cash) within Ruble denominated companies. The Group seeks to minimise exposure by limiting balances in soft currency deposits and securing forward contracts against its future sales.

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

17 May 2010

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 2010 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, , the consolidated statement of changes in equity, the condensed consolidated balance sheet the consolidated cash flow statement and related notes 1 to 15. 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 2010 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 Auditors

London, United Kingdom

14 May 2010

 

END

 

 

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