Interim Results

RNS Number : 8920Y

ITE Group PLC

14 May 2019

 

14 May 2019

ITE GROUP PLC

("ITE" or the "Group")

INTERIM RESULTS ANNOUNCEMENT

Transformation and Growth programme continues to drive strong growth

Financial highlights

	Six months to 31 March 2019	Six months to 31 March 2018
Volume sales	354,300 m2	353,300 m2
Revenue	£107.8m	£75.4m
Headline profit before tax1	£24.5m	£16.0m
Profit before tax	£1.9m	£1.3m
Headline diluted earnings per share2,3	2.3p	2.3p
Diluted earnings per share3	(0.1)p	(0.4p)
Interim dividend per share3	0.9p	0.9p
Net debt4	£108.9m	£51.2m

·        Revenue of £107.8m; growth of 6% on a like-for-like basis⁵, driven by Transformation and Growth (TAG) initiatives and focus on Core⁶ events. Excluding Acetech Delhi like-for-like revenue growth was 8% 

·        The five largest recurring shows in the period which have had TAG investment, collectively delivered 14% like-for-like revenue growth

·        Headline profit before tax of £24.5m, growth of 7% on a like-for-like basis, with increased margins

·        Statutory profit before tax of £1.9m after increased M&A-related costs, including amortisation on acquired intangible assets, the loss on disposal of non-core events, transaction costs and integration costs

·        Cash conversion⁷ over 100%

·        Net debt increased as expected from £51.2m to £108.9m following the Ascential Events and Mining Indaba acquisitions

·        Interim dividend maintained at 0.9p³, in line with policy

·        Forward bookings⁸ of £200m already contracted for FY19; FY20 forward bookings up 11% on a like-for-like basis

Strategy update

·        TAG programme now in its final year, with a focus on execution

·        The Ascential Events and Mining Indaba integrations are on track

·        Portfolio was further strengthened with the sale of non-core events in Russia and closure of a further 24 less-profitable events

·        Secured multi-year deal with Crocus Expo for Russian events

·        Expect to reach most TAG targets earlier than planned and all targets within planned timeframe

Mark Shashoua, CEO of ITE Group plc, commented:

"2019 is all about execution and embedding the people and processes that we have put into place since the inception of our Transformation and Growth programme.

The benefits of the programme are clear, with like-for-like revenue growth of 6% (8% excluding Acetech Delhi), and overall revenues including acquisitions up 43%. Our top five recurring events that received TAG investment during the period, collectively achieved 14% like-for-like revenue growth. Headline profit before tax grew 7% on a like-for-like basis (11% excluding Acetech Delhi). As the quality of our events improve and TAG investment levels out, we have improved our headline operating profit margin, which has increased from 23% to 25%.

The outlook for the remainder of the year is strong, owing to our continued focus on forward bookings. Contracted revenues already stand at 94% of full year consensus and are 6% ahead of this time last year on a like-for-like basis. We have also contracted £58m of revenues for FY20, representing a like-for-like increase of 11% giving us good visibility into next year.

We continue to trade in line with Board expectations for FY19 and looking further ahead, we expect to see the full benefits of the investments we have made into our acquired events from FY20 onwards, and we have a much-improved portfolio of events that is well positioned to deliver further sustainable growth in the years to come."

1.         Headline profit before tax is defined as profit before tax and adjusting items, which include amortisation of acquired intangibles, impairment of goodwill, intangible assets and investments, profits or losses arising on disposal of Group undertakings, restructuring costs, transaction and integration costs on completed and pending acquisitions and disposals, tax on income from associates and joint ventures, gains or losses on the revaluation of deferred/contingent consideration and on equity option liabilities over non-controlling interests, and imputed interest charges on discounted equity option liabilities - see note 3 to the condensed consolidated financial statements for details.

2.         Headline diluted earnings per share is calculated using profit attributable to shareholders before adjusting items - see notes 3 and 6 to the condensed consolidated financial statements for details.

3.         Headline diluted earnings per share, diluted earnings per share and interim dividend per share have all been restated to account for the bonus element of the rights issue that took place in July 2018.

4.         Net debt is defined as cash and cash equivalents after deducting bank loans.

5.         Like-for-like results are stated on a constant currency basis, after excluding events which took place in the current period but did not take place under our ownership in the comparative period and after excluding events which took place in the comparative period but did not take place under our ownership in the current period. For clarity, this excludes all:

-        Biennial events;

-        Timing differences (i.e. events that ran in only one of the current or comparative periods, due to changes in the event dates);

-        Launches;

-        Cancelled or disposed of events that did not take place under our ownership in the current year;

-        Acquired events in the current period; and

-        Acquired events in the comparative period that didn't take place under our ownership in the comparative period (i.e. they took place pre-acquisition).

See 'Trading highlights and review of operations' for further detail.

6.         Core events are those of strategic importance to our future and include the Group's largest events, those with the greatest potential for growth and a number of smaller but strategically important events. Following the strategic review, the Group deliberately segmented its business into Core and Non-Core, enabling management to increase its focus on events that present the greatest opportunities whilst reducing distraction from smaller events.

7.         Cash conversion is defined as cash generated from operations before net venue utilisation and the cash impact of the adjusting items included in the definition of headline profit before tax, expressed as a percentage of headline profit before tax adjusted for net finance costs and non-cash profits, including foreign exchange gains/losses, depreciation and amortisation.

8.         Forward bookings are contracted revenues for the years ending 30 September 2019 and 30 September 2020. These are the bookings as at 10 May 2019, unless otherwise stated.

Enquiries:

Mark Shashoua, Chief Executive Officer Andrew Beach, Chief Financial Officer Melissa McVeigh, Director of Communications	ITE Group plc	020 3545 9000
Charles Palmer / Harry Staight	FTI Consulting	020 3727 1000
Nick Westlake / Matt Lewis	Numis	020 7260 1000

About ITE Group plc

ITE Group plc was founded in 1991 and is now one of the world's leading organisers of international exhibitions and conferences.

ITE Group's strategic vision is to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers. In May 2017 the Group launched its Transformation & Growth (TAG) programme, which is designed to transform the Company from a geographic market-share led business to a product-led business that focuses on market-leading events through a centralised operating model, wherever they are in the world. ITE strives to run the best shows and offer the best service to its customers regardless of location. By putting exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth for our shareholders.

ITE Group is a public limited company and has been listed on the main market of the London Stock Exchange since 1998.
 

Executive summary

ITE has delivered a strong trading performance as the benefits of the TAG programme initiatives are being realised, resulting in good like-for-like revenue and headline profit before tax growth. Headline operating profit margins have increased to 25% (2018: 23%), as the scalable platform introduced through the TAG programme is supporting the revenue growth. The acquisitions of Ascential Events Limited ("Ascential Events") and Mining Indaba and the divestment and closure of a number of smaller non-core events in the last 12 months gives us a significantly stronger and more diversified portfolio of events.

Revenues of £107.8m (2018: £75.4m) for the first six months are 6% higher than the same period last year on a like-for-like basis. Excluding Acetech Delhi, one of our larger events that was space constrained due to ongoing venue construction work this year, like-for-like revenue growth was 8%. This was due to improved like-for-like trading (£3.4m), driven by strong performances across several divisions, in particular Russia and Global Brands.

The Group reported a statutory profit of £1.9m for the period (2018: £1.3m), after increased costs associated with the acquisitions and disposals completed in the last 12 months. The reported profit is after including amortisation on acquired intangible assets of £12.0m (2018: £5.8m), the loss on disposal of non-core events of £2.4m (2018: £nil), M&A transaction costs of £1.4m (2018: £0.7m) and integration costs of £3.4m (2018: £nil).

The Group is benefiting from the TAG investment, most noticeably at the larger Core events where investment has been focused. During the period, the Group's largest recurring events took place in Russia and in the Global Brands division, with both divisions delivering strong performances, achieving like-for-like revenue growth of 10% and 23% respectively, both comfortably ahead of the GDP growth in their respective markets. This was the second year of TAG improvements in Russia and the second consecutive period of like-for-like double-digit revenue growth from the retained Russian business. In Russia, we have also secured an excellent multi-year contract with Crocus Expo, the newest, purpose-built venue in Moscow, for almost the entire portfolio of Moscow events. This ensures the future of our key events in terms of space, dates and price. We are extremely pleased to have been able to achieve this with no large upfront payment which was customary in the past.

This TAG investment has largely benefitted our core shows in Moscow, Istanbul and the Africa Oil Week and Breakbulk events within our Global Brands portfolio. Exhibitor NPS scores at these events are up significantly, on average by 10 points. Core buying groups and revisits, which are key indicators of quality audiences returning throughout the event and staying longer, grew double-digit leading to collective double-digit revenue growth in our top five events that received TAG investment, for the second year in a row.

This has also led to increased levels of rebooking for FY20, contributing to the 11% increase in forward bookings for FY20 compared to this time last year, on a like-for-like basis, of £58m.

We achieved like-for-like revenue growth in the period across all regions, with the exception of the UK and Asia divisions. The three events in the UK division that ran in the current and comparative periods were Moda fashion events. The largest of the three, Moda, is a mid-market event that runs twice a year in Birmingham and has been challenged for some time. It has now been integrated into the fashion portfolio, post the acquisition of Pure from Ascential plc. The integration is progressing well and as a larger fashion portfolio is in a better position to deliver growth in FY20. As expected, there wasn't enough time to change the trajectory of decline at Spring Fair for 2019, but a restructured management team, plus considerable investment into the event and a complete re-edit is leading to growth in new business. In Asia the decline is attributable to the aforementioned space constraints at the Acetech Delhi event while a new venue is being built, without which the region delivered like-for-like revenue growth.

Like-for-like revenue growth across almost all markets in the period has been achieved despite facing a number of trading headwinds including macro-economic challenges in Turkey, tensions between Ukraine and Russia and Brexit. The macro-economic challenges in Turkey are also having a knock-on effect in some of our other markets that attract overseas exhibitors from Turkey, and as a result we saw a number of cancellations at some of our Russian events, most notably at MITT, our international travel and tourism event.

Our Chinese joint venture Sinostar performed well again, contributing £6.9m to profits (2018: £6.7m).

We have largely completed the integration of the Ascential Events portfolio into the Group and we have merged the teams into the Paddington office. We expect to realise the top end of the forecast annualised synergies and have focused on implementing the investment cases that will drive growth in the acquired events in FY20.

Strategic Update - Delivering transformation and growth

As we enter the final phase of our TAG programme, there is a clear focus on execution, now that we have put the necessary building blocks in place.

Since we announced the TAG programme in May 2017, we have hired a new management team, centralised our operating model and instilled operational rigour at a local level. We have achieved this by recruiting heads of best practice across all our activities, rolling out best practice blueprints, investing in our key shows and making them more content-rich, upskilling and incentivising our sales and marketing teams, as well as investing in new systems to serve our customers better and operate the business more efficiently. We have now created a scalable platform from which we can grow. 

Meanwhile, we have managed our portfolio to focus on those events which are, or have the potential to be, market-leading and that we own 100%. Since the start of TAG, we have more than halved the size of our portfolio, whilst improving the overall quality of events with revenue per event up 220% and still delivering like-for-like revenue and profit growth.

In the first six months of FY19, we have continued to make progress against each of our three pillars of TAG:

·      Create a scalable platform;

·      Actively manage our portfolio; and

·      Make selective product-led acquisitions.

Create a scalable platform

We are now able to take advantage of the significant work completed in the first years of TAG, with regards to creating a scalable platform. Having put in place those building blocks, such as best practice processes, improved systems and highly-motivated event teams, we are now able to execute and realise the benefits of our transformation.

Investing in new systems is an essential part of creating a scalable platform. This year we are building new integrated finance systems, which will give us better transparency and control over global accounting.

Only by continuing to improve customer service and event quality, will we drive customer retention. Last year we introduced a customer success team, whose role it is to help exhibitors market themselves and ensure they meet the right people at our events, thereby increasing their return on investment. So far this year the team has made over 10,000 proactive contacts with our customers. 

We continue to place a huge focus on event content, which attracts the highest quality audience when produced and delivered correctly. The number of key visitors attending those of our shows which have benefitted from TAG investment, has grown 8% year on year.

Finally, our new lead generation process, which has moved us on from individuals sourcing their own leads to a more systematic approach by analysing market sectors, is allowing us to take a more targeted approach for each event. This is having a positive impact on new business for events which have benefitted from TAG investment during the first half of this year.

Actively manage the portfolio

We continue to proactively manage our portfolio, in order to increase focus and investment on the shows which offer the best opportunities for growth.

At the start of the financial year we sold 56 small, regional events in Russia. These events had been yield-driven for many years and the cost to improve and bring them up to an international standard would have diminished profitability. We also closed a further 24 less profitable events, most of which operated in Siberia, and in March we disposed of an additional five events in Azerbaijan. 

As disclosed in note 32 of the last Annual Report, during FY18 a supplier of the Group threatened to make a claim for additional rent of £28.8m in respect of the use of a venue by the Group in 2016 and 2017. The venue is in Novosibirsk, Siberia, which is a non-core market for the Group. The Group closed its business in Siberia during the period. Since the date of the Annual Report, court proceedings have been started and the Group is engaged in litigation with the landlord of the venue. The landlord's claim is additional rent of £20m (as set out in the claim), whilst the Group is seeking a declaration from the Court that the rent claimed is unreasonable and therefore unenforceable under Russian law. The Group's lawyers' advice is that they consider the Group likely to succeed in the litigation. Accordingly, no provision has been made as at 31 March 2019 as management does not expect any economic outflow will arise as a result of the litigation.

Our portfolio of events has been materially enhanced following the start of the TAG programme. Overall, we have more than halved our portfolio through closing and disposing of underperforming events, but continue to deliver revenue and profit growth. Since May 2017, average revenues per show have more than trebled, from £0.5m to £1.6m, a key illustration of the success of the TAG programme, together with the impact of recent acquisitions (see Product led acquisitions below).

We will continue to manage our portfolio on an ongoing basis in order to maximise growth.

Product-led acquisitions

The integration of the Ascential business, which we acquired in July 2018, is making good progress. We have put in place an entirely new management structure and organisation design, aligned our reporting periods and accounting policies, as well as HR policies, and moved to be co-located in the same building in Paddington. The final stage is systems integration, which is planned to take place throughout this summer.

In October we announced the completion of a further market-leading event into our Global Brands division - that of Mining Indaba. As the world's largest mining investment conference, dedicated to the capitalisation and development of mining in Africa, this event met all our criteria for selecting product-led acquisitions. It is the must-attend event in the African mining industry, attracting nearly 6,000 industry leaders, investors and government officials from around the world to Cape Town each year.

With the focus and investment Mining Indaba will receive as part of our TAG programme, we believe we can accelerate its growth. There are some clear synergies with Africa Oil Week, including sharing some of the same ministries and customers, streamlining their operations, achieving greater purchasing power and offering a more consistent product for both sets of customers. We have merged the two teams and are investing in new content, onsite sales and lead generation at Mining Indaba to drive growth from FY20 onwards.

We now have a robust operating platform from which to accelerate growth through selective acquisitions in the future, that can both leverage our platform and further strengthen our portfolio.

Outlook

We are now in the final year of the TAG programme and we expect to meet most of our TAG targets earlier than planned and are on track to deliver on all of our targets within the expected timeframe.

The Group enters the second half of the year with excellent visibility of revenues having contracted £200m of revenue for the current financial year as at 10 May 2019, representing circa 94% of market expectations for the full year. As a result of our focus on forward bookings, the Group has also already contracted £58m of forward bookings for FY20, representing 26% of consensus revenue. The FY20 forward bookings are up 11% on a like-for-like basis and the improved level of bookings partly reflects the Group's focused sales initiatives on Core events, in line with its strategy.

The results show a second year of strong growth in the core events that have received TAG investment, as well as margin improvement as investment levels off. This too will follow with the newly-acquired acquisitions, which are receiving investments that will drive growth for FY20 onwards.

We continue to trade in line with Board expectations for FY19 with a strengthened portfolio of events, which will drive sustainable growth in the future. We firmly believe that in our final year of TAG we have a higher quality, better balanced portfolio that will offer stronger and more sustainable growth.

We believe that this model gives us a distinctive competitive edge in our industry, and is allowing us to deliver on our vision to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and return on investment for our customers.

Mark Shashoua

Chief Executive Officer

 

Financial performance

Statutory results

Revenues for the first six months of the year were £107.8m (2018: £75.4m), up £32.4m and 43% ahead of the comparative period. Revenue in the period has seen strong underlying growth and has benefited from the acquisitions of Ascential Events and Mining Indaba with a £49.4m revenue benefit from these events in the period, offset partially by the sale of our non-core Russian regions' portfolio of events in October 2018 and the impact of this being our weaker biennial year.

The impact of foreign exchange rates has had an adverse impact of £2.8m on the translation of revenue into sterling when compared to the prior period, largely as a result of the weakening of the Russian ruble and Turkish lira relative to sterling.

Profit before tax was £1.9m (2018: £1.3m), after an increased amortisation charge on acquired intangible assets following the Ascential Events and Mining Indaba acquisitions which increased the total amortisation to £12.0m (2018: £5.8m), and the loss on disposal of £2.4m (2018: nil) from the sale of our non-core operations in the Russian regions and our stand construction businesses in Central Asia. The profit before tax is after including restructuring costs of £2.1m (2018: £4.1m) incurred primarily as part of the TAG programme (£1.7m; 2018: £2.3m), with the remaining £0.4m (2018: £1.8m) largely relating to legal and property exit costs upon the closure of our Siberian operation in the period.

As part of the Ascential Events and Mining Indaba acquisitions, in the current year we have incurred £3.4m of costs relating to integration (£2.5m) and the realisation of synergies (£0.9m). The combined integration and synergy realisation costs to date relating to the Ascential Events integration are now £6.6m.

Transaction costs on completed and pending acquisitions and disposals totalled £1.4m (2018: £0.7m) due to the acquisition of Mining Indaba and the disposals of our stand construction businesses in Central Asia.

The impact of foreign exchange rates has had a £0.9m negative impact on profits compared to HY18. The reduced impact on profits compared to revenue is due to a natural hedging of costs in the same currencies which reduces the £2.8m revenue impact to £0.5m at a profit level, although this is exacerbated by lower gains recognised this year as a result of balance sheet retranslations which resulted in foreign exchange gains £0.4m lower than the comparative period.

The average exchange rates over the first six months of the year were:

	Six months ended 31 March 2019	Six months ended 31 March 2018	Movement
Russian ruble	85.7	78.3	+9%
Turkish lira	7.0	5.2	+35%
Indian rupee	92.0	87.6	+5%
Chinese renminbi	8.8	8.8	-
Euro	1.14	1.13	+1%

Diluted earnings per share for the first six months were (0.1p) (2018 restated: (0.4p)).

Headline results

In addition to the statutory results, headline results are presented, which are the statutory results after excluding a number of adjusting items, as the Board consider this to be the most appropriate way to measure the Group's underlying performance. In addition to providing a more comparable set of results year-on-year, this is also in line with similar adjusted measures used by our peer companies and therefore facilitates comparison across the industry. The adjusting items presented are consistent with those presented in the previous year.

Like-for-like revenues have increased by 6% year on year, despite the enforced decline at Acetech Delhi this year due to venue constraints. Excluding Acetech Delhi our like-for-like revenues increased by 8%. The increase is driven by TAG initiatives, the focus on Core events and the majority of markets returning to like-for-like revenue growth.

Headline profit before tax for the first six months of the year was £24.5m (2018: £16.0m), up 7% on a like-for-like basis. The results were positively impacted by the acquisitions of Ascential Events and Mining Indaba, with a number of events running in the period which were not owned in the comparative period adding £14.0m to profits. This was offset in part by £1.9m of biennial and event timing differences, by £2.2m due to disposals in Russia and South East Asia and by £0.9m of negative currency impact.

Headline diluted earnings per share for the first six months was 2.3p (2018 restated: 2.3p), reflecting the increase in the Group's profits, offset by the increased number of shares in issue following the rights issue in July 2018.
 

The following table reconciles statutory profit/(loss) before tax to headline profit before tax:

	Six months to 31 March 2019	Six months to 31 March 2018	Year ended 30 September 2018
	£m	£m	£m
Profit/(loss) on ordinary activities before taxation	1.9	1.3	(3.7)
Operating items
Amortisation of acquired intangible assets	12.0	5.8	13.6
Impairment of goodwill	-	-	5.6
Impairment of assets	-	-	1.9
Derecognition of goodwill on cessation of trading	-	2.2	2.2
Restructuring costs
-       TAG	1.7	2.3	5.4
-       Other	0.4	1.8	2.2
Integration costs
-       Integration costs	2.5	-	1.9
-       Costs to realise synergies	0.9	-	0.8
Transaction costs on completed and pending acquisitions and disposals	1.4	0.7	8.0
Loss/(gain) on disposal of investments	2.4	-	(2.9)
Tax on income from associates and joint ventures	1.7	1.5	1.6
Financing items
Revaluation of assets and liabilities on completed acquisitions and disposals	(0.4)	0.4	(1.2)
	__________	__________	__________
Headline profit before tax	24.5	16.0	35.4

Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. The charge has increased significantly in the period, as a result of the amortisation of the intangible assets recognised following the Ascential Events acquisition in July 2018.

No impairment or derecognition of assets has been recognised in the period. The previous year's results included a £5.6m impairment of our Turkey cash generating unit, due to the adverse macro-economic and geopolitical climate in the country which affected our long-term outlook for the region. In the prior year an impairment charge of £1.9m was also recognised, in relation to a rental deposit paid in advance in respect of future years' rent for use of a non-core venue, following the termination notice served by the Group to the venue owner which rendered the prepayment irrecoverable. The comparative period results included the derecognition of £2.2m of goodwill in respect of our UK publishing business following the cessation of trading of RAS Publishing.

Restructuring costs are the costs incurred in implementing and executing the Group's strategy, and includes £1.7m specifically related to the TAG programme, principally in relation to the roll out of new IT infrastructure and systems. The remaining £0.4m of restructuring costs relate to the closure of our operations in Siberia and the associated legal and property exit costs.

Integration costs are primarily attributable to the costs of integrating the Ascential Events acquisition into the Group, and to a lesser extent attributable to integrating the Mining Indaba business following the acquisition in October 2018. Costs to realise synergies relate to costs incurred to enable the Group to realise the synergy opportunities presented by the acquisitions, and primarily relate to redundancy and severance costs.

Transaction costs relate to costs incurred in pursuing acquisition and divestment opportunities as part of the TAG programme pillars; to actively manage our portfolio and to make selective product-led acquisitions. The most significant costs recognised relate to the acquisition of Mining Indaba completed in October 2018.

Tax on income from associates and joint ventures is an adjustment to ensure headline profit before tax is presented pre-tax. Statutory reported profits from associates and joint ventures are presented post-tax, therefore, in order to present a measure of profit before tax for the Group that is purely pre-tax, the tax on associate and joint venture profits is added back when reporting headline profit before tax. The tax on associates and joint ventures is included within the headline post-tax measure of profit and therefore headline profit after tax is presented consistently with the statutory measure of post-tax profit.

A number of the Group's acquisitions completed in recent years have future earn-out commitments, either through deferred or contingent consideration payments or through equity option liabilities to increase our current shareholdings. These are held on balance sheet at fair value and therefore change based on the latest foreign exchange rates, the proximity of the settlement date and the latest expectation of the settlement value. Revaluation of assets and liabilities on completed acquisitions and disposals include the losses from the revaluation of our equity options over non-controlling interests in our subsidiaries (charge of £0.2m), principally in relation to the remaining 40% interest in ABEC, the 2015 acquisition of the Indian exhibitions company including the Acetech portfolio, the imputed interest credit on the unwinding of the discount on the Group's deferred consideration receivable in relation to the disposal of ITE Expo LLC (credit of £0.4m), and a gain on the revaluation of the ITE Expo LLC deferred consideration (credit of £0.2m).

Cash flows

The Group's cash flow generated from operations over the first six months was £16.6m (2018: £12.1m) and cash conversion was 102%, as reconciled below. The year on year movement in cash flow generated from operations is largely as a result of cash generated by our newly acquired events. Net debt at 31 March 2019 has increased to £108.9m (2018: £51.2m). This largely reflects the increased drawdown in the second half of 2018 to fund the acquisition of Ascential Events in July 2018 and Mining Indaba in October 2018.

Headline operating cash flow reconciliation
		£m
Cash generated from operations		16.6
Net venue utilisation		5.0
Cash impact of adjusting items		7.5
Adjusted cash flow from operations		29.1
Headline profit before tax		24.5
Net finance costs		2.5
Depreciation of property, plant and equipment and amortisation of software		1.5
Foreign exchange gains on operating activities		(0.1)
Headline operating profit on a cash basis		28.4
Cash conversion		102%

Net venue utilisation is calculated as advances and prepayments to venues less utilisation of venue advances and prepayments. Net finance costs are defined as headline investment revenue less headline finance costs.

2019 interim Dividend

The Board has announced an interim dividend of 0.9p (2018 restated: 0.9p).

Trading highlights and review of operations

During the period the Group organised 61 events (2018: 99 events) which generated revenue growth of 43%. Like-for-like revenues were also 6% higher than for the same period last year.

Volume sales for the period were 354,300 sqm (2018: 353,300 sqm), reflecting the weaker biennial pattern, timing changes and disposals, all offset by acquisitions.

A summary of the Group's revenue and gross profits for the period is set out below.

	Volume Sales sqm'000	Revenue £m	Gross Profit £m
First half 2018	353	75.4	28.1
Biennial	(27)	(4.7)	(1.7)
Timing	(12)	(2.1)	(1.0)
Non-recurring	(16)	(3.0)	(1.0)
Disposals	(44)	(9.1)	(3.2)
Annually recurring 2018	254	56.5	21.2
Acquisitions	104	49.4	19.2
Launches	-	-	-
FX Translation	-	(2.8)	(0.9)
TAG costs	-	-	(0.5)
Like-for-like change	(7)	3.4	0.4
Annually recurring 2019	351	106.5	39.4
Timing	1	0.5	0.4
Biennial	2	0.8	0.4
First half 2019	354	107.8	40.2

Global Brands

The Global Brands division now comprises Africa Oil Week, Breakbulk, Mining Indaba and the Bett and CWIEME portfolios acquired from Ascential plc.

Africa Oil Week ran in October 2018 and performed exceptionally well, achieving like-for-like revenue growth of 38%. The event team was completely restructured and the event has received considerable TAG investment in the past two years. The result of this year's event is seen as an early proof of concept of the value of the TAG investment made to date.

The Breakbulk Americas event also ran in October, with a significant focus on yield growth over volume sales. Compared to the previous edition the event saw volume sales decline to 5,100 sqm (2018: 5,500 sqm) but like-for-like revenues increased by 4%. The largest event in the portfolio, Breakbulk Europe is due to take place in the second half of the year, and forward bookings are ahead of this time last year.

The acquired events, Mining Indaba and Bett, also took place in the first half of the year. Mining Indaba, the South African mining conference performed very well, with the mining sector currently in a growth cycle. Management made a conscious decision with Bett to focus on improving the key accounts proposition and approach to drive long term growth at the cost of short-term bookings. This resulted in the Bett UK event not achieving its full potential for this year. The Bett management team has been restructured, a key accounts team has been introduced and the investment plans have been put in place. A full re-edit was also communicated at the January 2019 event resulting in a very strong rebook onsite, which has contributed to forward bookings being ahead of this time last year by 12%, validating our approach.

The main CWIEME event acquired from Ascential plc takes place in the second half of the year in Berlin and is trading in line with expectations.

Asia

Like-for-like volume sales for the first six months in Asia were 6% lower than the comparative period. Excluding Acetech Delhi (see below), like-for-like volume growth was up 3%.

As highlighted last year, Pragati Maidan, the main exhibition centre in Delhi, is building a new purpose-built venue space that has led to a short-term decrease in volume at Acetech Delhi of 42%, from 18,700 sqm to 10,900 sqm. This decline is expected to affect only the current period edition of the event and the decline was in line with our expectations for the event. The majority of events in China take place in the second half of the year and are trading well in the lead up to the events.

Central Asia

Trading in Central Asia has seen like-for-like volume sales for the first six months 19% higher than for the comparative period. This is purely due to Uzbekistan performance as the region has benefited from the new, investment-friendly Presidential regime.

The largest part of the Group's business in the region is in Kazakhstan, which reported an 8% decrease in like-for-like volume sales, due in part to a small decline in the size of WorldFood Kazakhstan to 2,600 sqm from 3,200 sqm. This was offset however, by Uzbekistan where the largest event in the region, Uzbuild grew from 2,500 sqm to 4,800 sqm.

Eastern & Southern Europe

The only Turkish event that took place in the first half was EMITT. Volume sales were down at 19,000 sqm (2018: 22,300 sqm), due to a combination of planned management focus on yield increases, but also reflecting the difficulties facing the Turkish economy over the past 12 months. The achievement of like-for-like double-digit revenue growth at the event supports the decision to focus on yield.

Ukraine like-for-like volume sales were flat despite the imposition of martial law in the country for one month during the period, which is seen as a strong result given the circumstances.

Russia

Like-for-like revenues have grown by 10%, significantly ahead of local GDP and inflation. Like-for-like volume sales were flat compared to the comparative period, with a notably strong performance at YugAgro, the agriculture event in Krasnodar, which fully utilises the space available at the venue, offset by some small volume declines at various other events, largely due to an increased focus on improving yield at these events.

The largest event to take place in Moscow in the first half was the Moscow International Travel & Tourism (MITT) event, which saw decreased volume sales to 12,700 sqm (2018: 14,100 sqm) due to the loss of a number of Turkish exhibitors as a result of challenges being faced in the Turkish economy. 

UK

The UK division comprises Spring and Autumn Fair, Pure, Moda, Glee and BVE.

Spring Fair, acquired from Ascential plc last year, is now the largest event in the ITE portfolio and takes place at the NEC in Birmingham, selling more than 68,000 sqm. The event has suffered several years of declining volumes and revenues due to a lack of investment, and, as expected, there was not enough time to reverse that trajectory for this year. However, a new management team, considerable investment into the event and a complete re-edit have been well received by customers.

Pure, the high-end fashion event, runs twice per year in Olympia in London, in February and July. Pure, is the market leading event of its kind in the UK and continued its growth trajectory into 2019. The event sits well with our previously owned Moda events and a number of synergies are being realised across the fashion portfolio which are expected to have a small beneficial impact on profit this year followed by a more pronounced impact next year.

Trading remains challenged at the mid-market focused fashion event, Moda, held at the NEC in Birmingham, with volume sales falling 20% to 9,600 sqm (2018: 12,000 sqm), but the teams have recently been merged with Pure so that they will collaborate rather than compete.

April trading

April is now the second largest trading month for the Group after February, when Spring Fair takes place. MosBuild has benefitted from its move to Crocus Expo together with the increased sales and marketing focus and investment in content in order to drive a higher-quality audience, resulting in volume sales improvement from 35,900 sqm last year to 41,400 sqm this year.

Set out below are the results for the Group's principal events taking place in April 2019:

	2019 (sqm)	2018 (sqm)	Variance (%)
MosBuild (Russia)	41,400	35,900	+15%
Eurasia Rail (Turkey)*	10,400	8,400	+24%
TransRussia (Russia)	9,600	8,800	+9%
ExpoElectronica (Russia)	8,800	8,600	+2%
MiningWorld Russia (Russia)	7,600	5,300	+43%

*biennial event, with 2017 rather than 2018 comparative

Principal risks and uncertainties

The following principal risks and uncertainties disclosed in the 2018 Annual Report have not changed during the period:

·      Repatriation of profits from subsidiaries

·      Breach of anti-bribery laws or similar

·      Breach of sanctions or sanctions extensions

·      Inadequate BCP or risk management

·      Breach of health and safety regulations

·      Cyber attack causing systems to fail or leading to data loss

·      Share dealing with price-sensitive information

·      Political instability

·      Inadequate insurance

·      Liquidity risk

·      Acquisition integration

·      Effective control over non-wholly owned entities

·      Economic instability

·      Performance metrics out of alignment

·      Venue unavailability

·      Compliance with GDPR regulations

·      Natural disaster or terrorist incident

Refer to pages 58-63 of the 2018 Annual Report for details of the potential impact and mitigating actions in place for each of these risks.

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 the financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. The Group operates in territories that can be unpredictable and unexpected geopolitical and economic events such as terrorism, sanctions, currency controls and exchange rate movements can have an impact on the Group's reported trading performance. Given the Group's reliance on its relationships with venue owners to continue to operate its events, the unavailability of a venue at short notice, damage to a venue or a dispute with a venue owner could negatively affect the Group. A significant deterioration in trading from the major markets (notably Russia, the UK and/or Global Brands) could also adversely impact the Group's results. The Group currently has headroom on all of the Group's banking covenants, but the Directors also have a range of mitigating actions available and within their control in the event that a significant deterioration in trading occurs. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.

Responsibility statement

We confirm that to the best of our knowledge:

(a)   the condensed set of interim financial statements, which have been prepared in accordance with IAS 34 "Interim Financial Reporting" give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;

(b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact, and description of principal risks and uncertainties for the remaining six months of the financial year); and

(c)    the interim management report includes a fair review of the information required regarding related party transactions (under DTR 4.2.8R).

By the order of the board

Chief Executive Officer

Mark Shashoua

14 May 2019
 

Condensed Consolidated Income Statement

For the six months ended 31 March 2019

		Six months to 31 March 2019 (Unaudited)						Six months to 31 March 2018 (Unaudited)						Year ended 30 September 2018 (Audited)
		Headline		Adjusting items (note 3)		Statutory		Headline		Adjusting items (note 3)		Statutory		Headline		Adjusting items (note 3)		Statutory
Notes		£000		£000		£000		£000		£000		£000		£000		£000		£000
Revenue	2	107,793		-		107,793		75,362		-		75,362		175,669		-		175,669
Cost of sales		(67,609)		-		(67,609)		(47,217)		-		(47,217)		(107,648)		-		(107,648)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Gross profit		40,184		-		40,184		28,145		-		28,145		68,021		-		68,021
Other operating income		149		-		149		183		-		183		889		-		889
Administrative expenses		(20,658)		(21,327)		(41,985)		(18,127)		(12,844)		(30,971)		(40,003)		(38,664)		(78,667)
Foreign exchange gain on operating activities		143		-		143		555		-		555		2,237		-		2,237
Share of results of associates and joint ventures	2	7,264		(1,730)		5,534		6,665		(1,526)		5,139		7,557		(1,641)		5,916
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Operating profit/(loss)		27,082		(23,057)		4,025		17,421		(14,370)		3,051		38,701		(40,305)		(1,604)
Investment revenue		325		618		943		399		537		936		603		2,995		3,598
Finance costs		(2,872)		(241)		(3,113)		(1,774)		(929)		(2,703)		(3,887)		(1,791)		(5,678)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Profit/(loss) before taxation	2	24,535		(22,680)		1,855		16,046		(14,762)		1,284		35,417		(39,101)		(3,684)
Tax on profit/(loss)	4	(6,506)		5,047		(1,459)		(4,285)		2,977		(1,308)		(9,722)		6,699		(3,023)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Profit/(loss) for the period		18,029		(17,633)		396		11,761		(11,785)		(24)		25,695		(32,402)		(6,707)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Attributable to:
Owners of the Company		17,057		(17,633)		(576)		9,992		(11,785)		(1,793)		24,337		(32,402)		(8,065)
Non-controlling interests		972		-		972		1,769		-		1,769		1,358		-		1,358
		_________		_________		_________		_________		_________		_________		_________		_________		_________
		18,029		(17,633)		396		11,761		(11,785)		(24)		25,695		(32,402)		(6,707)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Earnings per share (p)
Basic1	6	2.3				(0.1)		2.3				(0.4)		4.9				(1.6)
Diluted1	6	2.3				(0.1)		2.3				(0.4)		4.9				(1.6)
		_________		_________		_________		_________		_________		_________		_________		_________		_________

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

¹ The weighted average number of shares used in the calculation of basic and diluted earnings per share for the six months ended 31 March 2018 has been restated for the impact of the rights issue, as set out in note 6.

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2019

		Six months to 31 March 2019	Six months to 31 March 2018	Year ended 30 September 2018
		Unaudited	Unaudited	Audited
		£000	£000	£000
Profit/(loss) for the period attributable to shareholders		396	(24)	(6,707)
Cash flow hedges:
Movement in fair value of cash flow hedges		351	1,447	1,946
Fair value of cash flow hedges released to the income statement		142	(446)	(97)
Currency translation movement on net investment in subsidiary undertakings		2,977	(3,059)	(7,808)
		__________	__________	__________
Total other comprehensive income		3,470	(2,058)	(5,959)
		__________	__________	__________
		3,866	(2,082)	(12,666)
		__________	__________	__________
Tax relating to components of comprehensive income		(72)	(141)	(314)
		__________	__________	__________
Total comprehensive income for the period		3,794	(2,223)	(12,980)
		__________	__________	__________
Attributable to:
Owners of the Company		2,822	(3,992)	(14,338)
Non-controlling interests		972	1,769	1,358
		__________	__________	__________
		3,794	(2,223)	(12,980)
		__________	__________	__________

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

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity

31 March 2019

Six month period ended 31 March 2019 (Unaudited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total		Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000		£000		£000
Balance as at 1 October 2018	7,416	279,756	2,746	457	(2,794)	80,800	(13,255)	(53,073)		(1,018)		301,035		23,847		324,882
(Loss)/profit for the period	-	-	-	-	-	(576)	-	-		-		(576)		972		396
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	2,977		-		2,977		-		2,977
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		351		351		-		351
Fair value of cash flow hedges released to the Consolidated Income Statement	-	-	-	-	-	-	-	-		142		142		-		142
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		(72)		(72)		-		(72)
Total comprehensive income for the six months to 31 March 2019	-	-	-	-	-	(576)	-	2,977		421		2,822		972		3,794
Dividends	-	-	-	-	-	(7,393)	-	-		-		(7,393)		(1,393)		(8,786)
Exercise of share options	-	-	-	-	-	(8)	-	-		-		(8)		-		(8)
Share-based payments	-	-	-	-	-	250	-	-		-		250		-		250
Issue of shares	-	-	-	-	-	-	-	-		-		-		-		-
Tax debited to equity	-	-	-	-	-	-	-	-		-		-		-		-
Disposal of subsidiary	-	-	-	-	-	-	-	379		-		379		(47)		332
Balance as at 31 March 2019	7,416	279,756	2,746	457	(2,794)	73,073	(13,255)	(49,717)		(597)		297,085		23,379		320,464

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity

31 March 2019

Six month period ended 31 March 2018 (Unaudited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total		Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000		£000		£000
Balance as at 1 October 2017	2,693	28,567	2,746	457	(4,240)	98,520	(13,255)	(45,265)		(2,553)		67,670		22,652		90,322
(Loss)/profit for the period	-	-	-	-	-	(1,793)	-	-		-		(1,793)		1,769		(24)
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(3,059)		-		(3,059)		-		(3,059)
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		1,447		1,447		-		1,447
Gain on effective portion of cash flow hedges recognised in / (released from) reserves	-	-	-	-	-	-	-	-		(446)		(446)		-		(446)
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		(141)		(141)		-		(141)
Total comprehensive income for the six months to 31 March 2018	-	-	-	-	-	(1,793)	-	(3,059)		860		(3,992)		1,769		(2,223)
Dividends	4	(4)	-	-	-	(5,962)	-	-		-		(5,962)		(128)		(6,090)
Exercise of share options	-	-	-	-	1,396	(62)	-	-		-		1,334		-		1,334
Share-based payments	-	-	-	-	-	167	-	-		-		167		-		167
Issue of shares	-	(20)	-	-	-	-	-	-		-		(20)		-		(20)
Tax debited to equity	-	-	-	-	-	(40)	-	-		-		(40)		-		(40)
Balance as at 31 March 2018	2,697	28,543	2,746	457	(2,844)	90,830	(13,255)	(48,324)		(1,693)		59,157		24,293		83,450

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

 

Condensed Consolidated Statement of Changes in Equity

31 March 2019

Year ended 30 September 2018 (Audited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total	Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000	£000		£000
Balance as at 1 October 2017	2,693	28,567	2,746	457	(4,240)	98,520	(13,255)	(45,265)		(2,553)		67,670	22,652		90,322
(Loss)/profit for the period	-	-	-	-	-	(8,065)	-	-		-		(8,065)	1,358		(6,707)
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(7,808)		-		(7,808)	-		(7,808)
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		1,946		1,946	-		1,946
Fair value of cash flow hedges released to the income statement	-	-	-	-	-	-	-	-		(97)		(97)	-		(97)
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		(314)		(314)	-		(314)
Total comprehensive income for the year ended 30 September 2018	-	-	-	-	-	(8,065)	-	(7,808)		1,535		(14,338)	1,358		(12,980)
Dividends	4	(4)	-	-	-	(9,980)	-	-		-		(9,980)	(163)		(10,143)
Exercise of share options	-	-	-	-	1,446	(69)	-	-		-		1,377	-		1,377
Share-based payments	-	-	-	-	-	456	-	-		-		456	-		456
Issue of shares	4,719	251,193	-	-	-	-	-	-		-		255,912	-		255,912
Tax debited to equity	-	-	-	-	-	(62)	-	-		-		(62)	-		(62)
Balance as at 30 September 2018	7,416	279,756	2,746	457	(2,794)	80,800	(13,255)	(53,073)		(1,018)		301,035	23,847		324,882

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Financial Position

31 March 2019

		31 March 2019	31 March 2018 (restated)	30 September 2018 (restated)
		Unaudited	Unaudited	Audited
	Notes	£000	£000	£000
Non-current assets
Goodwill	9	209,674	88,087	201,838
Other intangible assets	10	282,077	54,213	267,265
Property, plant and equipment		4,913	3,366	4,932
Interests in associates and joint ventures	11	47,553	48,671	43,293
Investments		500	-	-
Venue advances and other loans		765	3,683	2,141
Deferred consideration receivable		3,457	-	-
Derivative financial instruments	15	-	182	103
Deferred tax asset		9,498	4,828	10,435
		___________	___________	___________
		558,437	203,030	530,007
Current assets
Trade and other receivables	1, 12	62,983	40,418	54,038
Tax prepayment		2,367	777	2,015
Derivative financial instruments	15	23	-	-
Cash and cash equivalents		32,884	26,234	49,649
Assets classified as held for sale	1	-	3,261	9,624
		___________	___________	___________
		98,257	70,690	115,326
Total assets		656,694	273,720	645,333
Current liabilities
Trade and other payables	13	(40,306)	(16,443)	(35,863)
Current tax liabilities		(2,822)	(1,056)	(5,464)
Deferred income	1	(92,963)	(68,106)	(76,764)
Derivative financial instruments	15	(11,342)	(13,546)	(11,762)
Provisions		(312)	(503)	(1,469)
Liabilities classified as held for sale	1	-	(1,881)	(7,452)
		___________	___________	___________
		(147,745)	(101,535)	(138,774)
Non-current liabilities
Bank loans	14	(141,833)	(77,385)	(132,345)
Provisions		(1,572)	(117)	(1,600)
Deferred income	1	(419)	(642)	(813)
Deferred tax liabilities		(44,457)	(10,152)	(46,595)
Derivative financial instruments	15	(204)	(439)	(324)
		___________	___________	___________
		(188,485)	(88,735)	(181,677)
Total liabilities		(336,230)	(190,270)	(320,451)
		___________	___________	___________
Net assets		320,464	83,450	324,882
		___________	___________	___________
Equity
Share capital	16	7,416	2,697	7,416
Share premium account		279,756	28,543	279,756
Merger reserve		2,746	2,746	2,746
Capital redemption reserve		457	457	457
ESOT reserve		(2,794)	(2,844)	(2,794)
Retained earnings		73,073	90,830	80,800
Put option reserve		(13,255)	(13,255)	(13,255)
Translation reserve		(49,717)	(48,324)	(53,073)
Hedge reserve		(597)	(1,693)	(1,018)
		___________	___________	___________
Equity attributable to equity holders of the parent		297,085	59,157	301,035
Non-controlling interest		23,379	24,293	23,847
		___________	___________	___________
Total equity		320,464	83,450	324,882
		___________	___________	___________

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

 

Condensed Consolidated Cash Flow Statement

For the six months ended 31 March 2019

		Six months to 31 March 2019	Six months to 31 March 2018 (restated)	Year ended 30 September 2018  (restated)
	Notes	Unaudited	Unaudited	Audited
		£000	£000	£000
Operating activities
Operating profit/(loss) from continuing operations		4,025	3,051	(1,604)
Adjustments for non-cash items:
Depreciation and amortisation		13,530	6,901	16,288
Impairment of goodwill and intangible assets	3	-	-	5,572
Impairment of venue prepayment	3	-	-	1,843
Derecognition of goodwill on cessation of trading	3	-	2,216	2,216
Share-based payments		285	185	497
(Decrease)/increase in provisions		(1,185)	(183)	535
Loss/(profit) on disposal of plant, property and equipment and computer software		-	(2)	(17)
Foreign exchange gain on operating activities		(143)	(555)	(2,237)
Loss/(profit) on disposals	3	2,425	-	(2,968)
Fair value of cash flow hedges recognised in the income statement		142	(446)	(97)
Share of profit from associates and joint ventures	11	(5,534)	(5,139)	(5,916)
Dividends received from associates and joint ventures	11	594	1,693	6,420
Operating cash flows before movements in working capital		14,139	7,721	20,532
(Increase)/decrease in receivables		(5,350)	(1,175)	8,549
Advances and prepayments to venues		(5,829)	(3,865)	(6,585)
Utilisation of venue advances and prepayments		873	2,362	6,043
Increase/(decrease) in deferred income		13,295	11,340	(7,801)
(Decrease)/increase in payables		(518)	(4,283)	7,591
Cash generated from operations		16,610	12,100	28,329
Tax paid		(6,461)	(3,969)	(9,631)
Net cash from operating activities		10,149	8,131	18,698
Investing activities
Interest received		325	399	603
Investment in associates and joint ventures		-	-	(1,356)
Purchases of other investments		(500)	-	-
Acquisition of businesses - cash paid net of cash acquired		(22,759)	-	(294,502)
Purchase of property, plant and equipment and computer software		(2,097)	(1,760)	(4,254)
Disposal of plant, property and equipment and computer software		-	68	109
Disposal of subsidiaries - cash received net of cash disposed		(492)	-	7,326
Net cash flows from investing activities		(25,523)	(1,293)	(292,074)
Financing activities
Equity dividends paid		(7,411)	(5,985)	(10,582)
Dividends paid to non-controlling interests		(1,393)	(683)	(154)
Interest paid and bank charges		(2,872)	(1,774)	(3,887)
Proceeds from the issue of share capital and exercise of share options		-	1,314	1,370
Proceeds from the rights issue net of fees		-	-	255,940
Drawdown of borrowings		124,565	190,009	341,804
Repayment of borrowings		(114,438)	(185,622)	(282,513)
Net cash flows from financing activities		(1,549)	(2,741)	301,978
Net (decrease)/increase in cash and cash equivalents		(16,923)	4,097	28,602
Cash and cash equivalents at beginning of period		49,649	23,321	23,321
Effect of foreign exchange rates on cash and cash equivalents		158	(270)	(81)
Cash and cash equivalents classified as held for sale		-	(914)	(2,193)
Cash and cash equivalents at end of period		32,884	26,234	49,649

The working capital movements in receivables and deferred income for the six months to 31 March 2018 and year ended 30 September 2018 have been restated upon the adoption of IFRS 15 as described in note 1. There are no net impacts on cash flows.

Notes 1 to 19 form an integral part of the condensed consolidated financial statements.

Notes to the Interim Financial Statements

1. General Information and basis of preparation

The information for the year ended 30 September 2018 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 auditor 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 accounting policies applied by the Group in the interim financial statements are the same as those set out in the Group's Annual Report and Accounts for the year ended 30 September 2018, with the exception of the following new standards and interpretations which have been adopted in the current year:

- IFRS 2 Share-based Payment (amendments) Classification and Measurement of Share-based Payment Transactions

- Clarifications to IFRS 15 Revenue from Contracts with Customers

- IFRS 9 Financial Instruments

- IFRS 15 Revenue from Contracts with Customers

The amendments to IFRS 2 Share-based Payment have no impact.

In the current period the Group has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to other IFRSs. IFRS 9 introduces new requirements for 1) the classification and measurement of financial assets and financial liabilities, 2) impairment for financial assets and 3) general hedge accounting.

On adoption of IFRS 15 Revenue from Contracts with Customers, the Group has elected to restate comparative information using the fully retrospective method from prior periods upon adoption of IFRS 15. Under IFRS 15, the deferred income, and corresponding trade receivable, may not be recognised until the earlier of the service being provided and the payment falling due. This has resulted in a material reduction to the deferred income and trade receivables on adoption of the standard. The impact of this change on the balance sheets as at 31 March 2018 and 30 September 2018 is shown the table below and there is no net asset impact of these adjustments. There was no impact on the income statement for the six month period ended 31 March 2018 and year ended 30 September 2018.

30 September 2018	As previously reported		IFRS 15 reclassifications		Restated
	£000		£000		£000
Current assets
Trade and other receivables	77,056		(23,018)		54,038
Assets classified as held for sale	10,483		(859)		9,624
Total assets	87,539		(23,877)		63,662
Current liabilities
Deferred income	(99,114)		22,350		(76,764)
Liabilities classified as held for sale	(8,311)		859		(7,452)
Non-current liabilities
Deferred income	(1,481)		668		(813)
Total liabilities	(108,906)		23,877		(85,029)

 

Notes to the Interim Financial Statements

1. General Information and basis of preparation (continued)

31 March 2018	As previously reported		IFRS 15 reclassifications		Restated
	£000		£000		£000
Current assets
Trade and other receivables	56,899		(16,481)		40,418
Total assets	56,899		(16,481)		40,418
Current liabilities
Deferred income	(83,105)		14,999		(68,106)
Non-current liabilities
Deferred income	(2,124)		1,482		(642)
Total liabilities	(85,229)		16,481		(68,748)

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

New, amended and revised Standards	Effective date
Amendments to IAS 12 Income taxes	1 January 2019
IFRS 16 Leases	1 January 2019

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group, with the exception of the adoption of IFRS 16 Leases, which will replace the current leasing standard, IAS 17 Leases.

IFRS 16 requires all leases to be treated in a consistent way to the current rules on finance leases. This will result in all leases being disclosed in the Statement of Financial Position, with the exception of short-term leases, where, for lease terms of less than 12 months, an election can be made to account for the expense in line with the payment terms.

This is expected to have a significant impact on both the Group's Statement of Financial Position, as there will be an increase in lease assets and financial liabilities recognised, and the Group's Income Statement, through a changing of the expense profile and the financial statement lines in which the expenses are recognised. The adoption of IFRS 16 will increase the expense charged at the beginning of our lease contracts, due to the straight-line operating lease expense charge being replaced by the finance cost approach, which, by its nature is front-loaded. Currently, our operating lease rentals are recognised within administrative expenses, but under IFRS 16, these will be classified as finance costs and therefore operating profit is expected to increase on adoption. The financial impact of the changes have yet to be quantified by management.

 

Notes to the Interim Financial Statements

2. Segmental information

The Group has identified reportable segments based on financial information used by the Executive Team in allocating resources and making strategic decisions. The Executive Team (consisting of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief People Officer), are considered to be the Group's Chief Operating Decision Maker. The Group evaluates performance on the basis of headline profit or loss before tax.

The Group's reportable segments are operational business units and groups of events that are managed separately, either based on geographic location or as portfolios of events. For the year ended 30 September 2018 the Group made changes to the reportable segments, adding a new United Kingdom segment, which consists of Moda, previously included in the Global Brands segment, and the acquired Ascential events, excluding Bett and CWIEME. Bett and CWIEME are included in the Global Brands segment. The segmental information for the six months to 31 March 2018 has been restated to reflect the updated reportable segments.

The products and services offered by each business unit are identical across the Group. The revenue and headline profit before tax are attributable to the Group's one principal activity, the organisation of trade exhibitions, conferences and related activities and can be analysed by operating segment as follows:

Six months to 31 March 2019 Unaudited	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Revenue	31,667	12,381	6,667	3,717	24,118	29,243	107,793
Segment headline profit before tax	13,423	9,459	698	(13)	7,993	8,657	40,217
Unallocated items							(15,682)
Headline profit before tax							24,535
Adjusting items (note 3)							(22,680)
Profit before tax							1,855
Tax							(1,459)
Profit after tax							396

The revenue in the period of £107.8m includes £1.1m (six months to 31 March 2018: £0.2m; year ended 30 September 2018: £0.2m) of barter sales. No individual customer amounts to more than 10% of Group revenues.

Unallocated items include:

·      other income;

·      head office costs;

·      unallocated TAG costs of £3.0m;

·      foreign exchange gains and losses on translation of monetary assets and liabilities held in Group subsidiary companies that are denominated in currencies other than the functional currency of the subsidiaries; and

·      net finance costs.

 

Notes to the Interim Financial Statements

2. Segmental information (continued)

The Group's share of profits from associates and joint ventures, capital expenditure and amortisation and depreciation can be analysed by operating segment as follows:

Six months to 31 March 2019 Unaudited	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Share of results of associates and joint ventures
Share of results before tax	-	7,410	-	-	(146)	-	7,264
Tax	-	(1,759)	-	-	29	-	(1,730)
Share of results after tax	-	5,651	-	-	(117)	-	5,534
Capital expenditure
Segment capital expenditure	8	170	72	128	160	-	538
Unallocated capital expenditure							1,559
							2,097
Depreciation and amortisation
Segment depreciation and amortisation	6,273	1,826	40	1,128	134	3,039	12,440
Unallocated depreciation and amortisation							1,090
							13,530

The impairment and derecognition charges recognised in respect of goodwill, intangible assets, investments in associates and joint ventures, and other assets can be analysed by operating segment as follows:

	Six months to 31 March 2019	Six months to 31 March 2018 (restated)	Year ended 30 September 2018
	£000	£000	£000
Eastern & Southern Europe	-	-	5,572
Russia	-	-	1,843
UK	-	2,216	2,216
	-	2,216	9,631

 

Notes to the Interim Financial Statements

2. Segmental information (continued)

The Group's assets and liabilities can be analysed by operating segment as follows:

As at 31 March 2019 Unaudited	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Assets
Segment assets	244,441	106,760	11,973	19,178	36,918	198,245	617,515
Unallocated assets							39,179
Total assets							656,694
Liabilities
Segment liabilities	(34,187)	(48,363)	(5,456)	(8,656)	(26,852)	(33,963)	(157,477)
Unallocated liabilities							(178,753)
Total liabilities							(336,230)
Net assets							320,464

The comparative period segmental information has been restated to reflect the changes made to the operating segments in the prior year, and the adoption of IFRS 15.

Six months to 31 March 2018 Unaudited (restated)	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Revenue	6,668	16,641	7,487	4,638	35,334	4,594	75,362
Segment headline profit before tax	2,671	10,594	1,158	(127)	11,048	843	26,187
Unallocated items							(10,141)
Headline profit before tax							16,046
Adjusting items (note 3)							(14,762)
Profit before tax							1,284
Tax							(1,308)
Loss after tax							(24)

 

Notes to the Interim Financial Statements

2. Segmental information (continued)

Six months to 31 March 2018 Unaudited (restated)	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Share of results of associates and joint ventures
Share of results before tax	-	6,665	-	-	-	-	6,665
Tax	-	(1,526)	-	-	-	-	(1,526)
Share of results after tax	-	5,139	-	-	-	-	5,139
Capital expenditure
Segment capital expenditure	63	94	17	56	381	2	613
Unallocated capital expenditure							1,147
							1,760
Depreciation and amortisation
Segment depreciation and amortisation	2,367	1,982	204	1,315	145	167	6,180
Unallocated depreciation and amortisation							721
							6,901

The Group's assets and liabilities can be analysed by operating segment as follows:

As at 31 March 2018 Unaudited (restated)	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Assets
Segment assets	36,543	113,261	12,193	25,727	62,241	12,781	262,746
Unallocated assets							10,974
Total assets							273,720
Liabilities
Segment liabilities	(2,519)	(52,596)	(5,004)	(9,366)	(34,410)	(2,277)	(106,172)
Unallocated liabilities							(84,098)
Total liabilities							(190,270)
Net assets							83,450

 

Notes to the Interim Financial Statements

2. Segmental information (continued)

Year ended 30 September 2018	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Revenue	11,533	25,700	24,483	15,155	73,291	25,507	175,669
Segment headline profit before tax	2,145	10,240	7,155	4,393	24,319	6,881	55,133
Unallocated costs							(19,716)
Headline profit before tax							35,417
Adjusting items (note 3)							(39,101)
Loss before tax							(3,684)
Tax							(3,023)
Loss after tax							(6,707)

Year ended 30 September 2018	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Share of results of associates and joint ventures
Share of results before tax	-	6,665	-	71	821	-	7,557
Tax	-	(1,477)	-	-	(164)	-	(1,641)
Share of results after tax	-	5,188	-	71	657	-	5,916
Capital expenditure
Segment capital expenditure	5	304	54	106	587	3	1,059
Unallocated capital expenditure							3,195
							4,254
Depreciation and amortisation
Segment depreciation and amortisation	6,018	3,948	383	2,426	258	1,692	14,725
Unallocated depreciation and amortisation							1,563
							16,288

 

Notes to the Interim Financial Statements

2. Segmental information (continued)

The Group's assets and liabilities can be analysed by operating segment as follows:

30 September 2018 (restated)	Global Brands	Asia	Central Asia	Eastern & Southern Europe	Russia	UK	Total Group
	£000	£000	£000	£000	£000	£000	£000
Assets
Segment assets	217,885	106,348	11,013	16,188	65,826	208,108	625,368
Unallocated assets							19,965
							645,333
Liabilities
Segment liabilities	(12,789)	(52,355)	(4,081)	(4,784)	(22,523)	(33,060)	(129,592)
Unallocated liabilities							(190,859)
							(320,451)
Net assets							324,882

Geographical information

Information about the Group's revenue by origin of sale and non-current assets by geographical location are detailed below:

		Revenue				Non-current assets*
		Six months to 31 March 2019	Six months to 31 March 2018 (restated)	Year ended 30 September 2018		Six months to 31 March 2019	Six months to 31 March 2018 (restated)	Year ended 30 September 2018
		Unaudited	Unaudited	Audited		Unaudited	Unaudited	Audited
		£000	£000	£000		£000	£000	£000
Asia		13,137	17,334	27,756		87,407	90,849	82,013
Central Asia		3,906	4,536	15,054		4,691	3,996	4,030
Eastern & Southern Europe		2,936	3,961	12,958		10,212	20,275	12,121
Russia		16,192	26,384	52,694		21,532	26,921	16,084
UK		43,908	8,237	36,267		284,159	7,721	285,643
Rest of the World		27,714	14,910	30,940		140,938	48,440	119,681
		_______	_______	_______		_______	_______	_______
Total		107,793	75,362	175,669		548,939	198,202	519,572
		________	________	________		________	________	________

* Non-current assets exclude deferred tax assets and assets classified as held for sale.

 

Notes to the Interim Financial Statements

3. Adjusting items

The following (charges)/credits have been presented as adjusting items:

	Six months to 31 March 2019	Six months to 31 March 2018	Year ended 30 September 2018
	Unaudited	Unaudited	Audited
	£000	£000	£000
Operating items
Amortisation of acquired intangible assets	(12,026)	(5,764)	(13,631)
Derecognition of goodwill on cessation of trading	-	(2,216)	(2,216)
Impairment of goodwill	-	-	(5,572)
Impairment of venue prepayment	-	-	(1,843)
(Loss)/gain on disposals	(2,425)	-	2,968
Transaction costs on completed and pending acquisitions	(1,400)	(774)	(8,037)
Integration costs
-       Integration costs	(2,513)	-	(1,905)
-       Costs to realise synergies	(914)	-	(845)
Restructuring costs
-       TAG	(1,654)	(2,255)	(5,347)
-       Other	(395)	(1,835)	(2,236)
Tax on income from associates and joint ventures	(1,730)	(1,526)	(1,641)
Financing items
Revaluation of assets and liabilities on completed acquisitions and disposals	377	(392)	1,204
	___________	___________	___________
	(22,680)	(14,762)	(39,101)

4. Tax on profit/(loss) on ordinary activities

	Six months to 31 March 2019	Six months to 31 March 2018	Year ended 30 September 2018
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax
UK corporation tax	553	200	32
Foreign tax	2,839	3,273	9,601
	__________	__________	__________
	3,392	3,473	9,633
Deferred tax	(1,933)	(2,165)	(6,610)
	__________	__________	__________
Tax on profit on ordinary activities	1,459	1,308	3,023
	__________	__________	__________

Tax at the interim is charged on pre-tax profits, including those of associates and joint ventures, at a blended rate of 27% (2018: 27%) representing the best estimate of the weighted average annual corporation tax expected for the financial year adjusted for discrete items in the interim period.

 

Notes to the Interim Financial Statements

5. Dividends

Dividend per share for the final dividend in respect of the year ended 30 September 2017 and the interim dividend in respect of the year ended 30 September 2018 have been restated for the bonus element of the rights issue which took place in July 2018.

	Six months to 31 March 2019			Six months to 31 March 2018 (restated)					Year ended 30 September 2018 (restated)
	Unaudited			Unaudited					Audited
	Per share p	Settled in cash £000	Settled in scrip £000		Per share p	Settled in cash £000	Settled in scrip £000	Per share p		Settled in cash £000	Settled in scrip £000
Amounts recognised as distributions to equity holders in the period:
Final dividend in respect of the year ended 30 September 2018	1.0	7,393	-		-	-	-	-		-	-
Interim dividend in respect of the year ended 30 September 2018	-	-	-		-	-	-	0.9		4,018	-
Final dividend in respect of the year ended 30 September 2017	-	-	-		1.5	5,962	701	1.5		5,962	701
	1.0	7,393	-		1.5	5,962	701	2.4		9,980	701

The Directors have proposed an interim dividend for the year ending 30 September 2019 of 0.9p per ordinary share, a distribution of approximately £6.7m. The proposed dividend has been approved by the Board and has not been included as a liability as at 31 March 2019.

6. Earnings per share

The weighted average number of shares used for basic and diluted and headline basic and diluted earnings per share for 31 March 2018 has been restated as a result of the rights issue which took place during the year ended 30 September 2018, in order to provide a comparative measure. As a result, basic and diluted and headline basic and diluted earnings per share for 31 March 2018 have also been restated.

The calculation of basic, diluted and headline diluted earnings per share is based on the following earnings and numbers of shares:

	Six months to 31 March 2019 Unaudited	Six months to 31 March 2018 Unaudited (restated)	Year ended 30 September 2018 Audited
	Number of shares ('000)	Number of shares ('000)	Number of shares ('000)
Weighted average number of shares:
For basic earnings per share	739,784	432,487	500,822
Dilutive effect of exercise of share options	445	1,099	362
	________	________	________
For diluted earnings per share	740,229	433,586	501,184

 

Notes to the Interim Financial Statements

6. Earnings per share (continued)

Basic and diluted earnings per share

The calculations of basic and diluted earnings per share are based on the loss for the financial year attributable to equity holders of the parent of £0.6m (31 March 2018: £1.8m; 30 September 2018: £8.1m). Basic and diluted earnings per share were (0.1)p and (0.1)p respectively (31 March 2018 (restated): (0.4)p and (0.4)p respectively; 30 September 2018: (1.6)p and (1.6)p respectively). 445,000 share options (31 March 2018 (restated): 1,099,000; 30 September 2018: 362,000) were excluded from the weighted average number of ordinary shares used in the calculation of the diluted earnings per share because their effect would have been antidilutive.

Headline earnings per share

The calculations of headline basic and diluted earnings per share are based on the headline profit for the financial year attributable to equity holders of the parent of £17.1m (31 March 2018: £10.0m; 30 September 2018: £24.3m). Headline basic and diluted earnings per share were 2.3p and 2.3p respectively (31 March 2018 (restated): 2.3p and 2.3p respectively; 30 September 2018: 4.9p and 4.9p respectively).

 

Notes to the Interim Financial Statements

7. Acquisitions

On 23 October 2018 the Group completed the acquisition of the trade and assets relating to Mining Indaba from Euromoney Institutional Investor Plc. Mining Indaba is the leading event dedicated to bringing together mining and investment experts in order to develop mining interests in Africa.

The consideration of £28.7m comprises initial cash consideration of £20.0m paid on completion, and deferred cash consideration of £8.7m to be paid in June 2019.

During the period the Group incurred transaction costs on the acquisition of £0.5m, which are included within administrative expenses.

The amounts to be recognised in respect of the identifiable assets acquired and liabilities assumed are presented as follows:

	Fair value £000
Intangible assets - Trademarks		22,090
Intangible assets - Customer relationships		3,726
Trade and other receivables		864
Accrued expenses		(438)
Deferred income		(2,620)
Deferred tax liability		(633)
Identifiable net assets		22,989
Goodwill arising on acquisition		5,730
Total consideration		28,719

Satisfied by
Cash consideration		20,000
Deferred consideration		8,719
		28,719
Net cash outflow arising on acquisition
Cash consideration paid		20,000
Cash and cash equivalents acquired		-
		20,000

The goodwill of £5.7m arising from the acquisition reflects the strategic value of the acquisition of a market-leading event, including the expectation of new contracts and relationships, and the expected synergies with the complementary Africa Oil Week event which the Group already owns. The goodwill recognised is expected to be fully deductible for tax purposes. The fair value of trade and other receivables includes trade receivables with a fair value, after providing for expected uncollectable amounts, of £0.5m. No further amounts are currently expected to be uncollectable.

The acquired business has contributed £7.9m to Group revenue and a statutory profit before tax of £5.2m since acquisition. If the acquisition had occurred on 1 October 2018, it would have contributed the same amounts to Group revenue and statutory profit before tax.

 

Notes to the Interim Financial Statements

8. Disposals

ITE Expo LLC

Subsequent to the assets and liabilities of ITE Expo LLC being classified as held for sale at 30 September 2018, on 3 October 2018 the Group completed the disposal of ITE Expo LLC, the operating company for 56 of the Group's non-core, regionally-focused, smaller events in Russia, to Shtab-Expo LLC.

The Group will receive principal consideration of approximately £10.0m over the nine years following completion together with additional variable consideration of up to approximately £4.7m based on ITE Expo LLC's incremental revenue growth during this period. The terms of the deal incentivise the purchaser to make earlier payments to satisfy the consideration. If the purchaser has by 30 September 2023 paid principal consideration of approximately £6.3m, this will reduce the obligation to pay the remaining principal consideration by £1.4m and extinguish the obligation to pay any further future variable consideration.

When discounted, the fair value of the consideration receivable was £3.9m at disposal.

The net assets of ITE Expo LLC at the date of disposal were as follows:

		£000
Goodwill		3,916
Cash and cash equivalents		3,224
Other net liabilities		(2,261)
Net assets		4,879
Fair value of consideration received		3,899
Disposal costs		(631)
Proceeds net of related selling expenses		3,268
Loss on disposal		(1,611)
Satisfied by:
Cash and cash equivalents		95
Deferred consideration		3,804
		3,899
Net cash outflow arising on disposal:
Consideration received in cash and cash equivalents		95
Less: cash and cash equivalents disposed of		(3,224)
		(3,129)

A payment of £2.6m was made by ITE Expo LLC to the Group subsequent to the disposal date, in settlement of a liability due to another company within the Group. This reduced the cash and cash equivalents disposed of shortly after the disposal date to £0.6m.

Central Asia

During the period the Group also completed a number of smaller disposals within the Central Asia region with combined net assets of £1.0m. The Group received combined consideration of £0.6m, resulting in a loss on disposal of £0.8m being recognised, after the reclassification of cumulative exchange differences of £0.4m previously recognised in other comprehensive income.

 

Notes to the Interim Financial Statements

9. Goodwill

	Total Unaudited £000
At 1 October 2018	201,838
Additions through business combinations (note 7)	5,730
Amounts previously classified as held for sale	1,756
Exchange differences	350
	_________
At 31 March 2019	209,674
	_________

Amounts previously classified as held for sale relate to goodwill attributable to the retained Krasnodar event, YugAgro, which was not disposed of as part of the ITE Expo LLC disposal completed in October 2018. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the operation disposed of and the operation retained.

In line with the disclosures made in the 2018 Annual Report and Accounts, where an impairment was recognised in respect of the Turkey CGU, reducing headroom in the CGU to nil, we acknowledge a reasonably possible change in the future cash flows or discount rates for this CGUs could result in an impairment in the future.

10. Other intangible assets

	Total Unaudited £000
At 1 October 2018	267,265
Additions	1,304
Additions through business combinations (note 7)	25,816
Amortisation of acquired intangible assets	(12,026)
Amortisation of computer software	(716)
Disposals	(5)
Exchange differences	439
	_________
At 31 March 2019	282,077
	_________

11. Interests in associates and joint ventures

	Total Unaudited £000
At 1 October 2018	43,293
Share of results of associates and joint ventures	5,534
Dividends received	(594)
Disposals	(722)
Foreign exchange	42
	_________
At 31 March 2019	47,553
	_________

 

Notes to the Interim Financial Statements

12. Trade and other receivables

	31 March 2019 Unaudited	31 March 2018 Unaudited (restated)	30 September 2018 Audited (restated)
	£000	£000	£000
Trade receivables	35,194	21,967	34,685
Other receivables	7,615	4,656	4,118
Venue advances and prepayments	6,980	4,148	2,752
Prepayments and accrued income	13,194	9,647	12,483
	___________	___________	___________
	62,983	40,418	54,038
	___________	___________	___________

13. Trade and other payables

	31 March 2019 Unaudited	31 March 2018 Unaudited	30 September 2018 Audited
	£000	£000	£000
Trade payables	6,880	755	7,557
Taxation and social security	-	1,723	1,266
Other payables	6,437	3,378	7,163
Accruals	17,439	9,670	16,242
Deferred consideration payable	9,550	917	3,635
	___________	___________	___________
	40,306	16,443	35,863
	___________	___________	___________

14. Bank loans and overdraft

Total drawdowns under the facility of £143.7m at 31 March 2019 were denominated in sterling (£128.2m) and euro (£15.5m). At 31 March 2019 the Group had £16.3m (31 March 2018: £22.6m) of undrawn committed facilities.

All borrowings are arranged at floating interest rates, thus exposing the Group to interest rate risk. The Group uses interest rate swaps to mitigate this risk, hedging £50.0m of the debt (31 March 2018: £50.0m; 30 September 2018: £50.0m), reducing the exposure to fluctuations in interest rates. All borrowings are secured by a guarantee between a number of Group companies.

 

Notes to the Interim Financial Statements

15. Derivative financial instruments

Derivative financial instruments are classified according to the following categories in the table below.  The Group's derivative financial instruments are categorised into levels to reflect the degree to which observable inputs are used for determining their fair value.  The Group's foreign currency forward contracts and interest rate swaps are classified as Level 2, while the equity and put options are classified as Level 3.

	31 March 2019 Unaudited		31 March 2018 Unaudited		30 September 2018 Audited
	Notional	Fair value	Notional	Fair value	Notional	Fair value
	£000	£000	£000	£000	£000	£000
Current assets
Foreign currency forward contracts	1,928	23	-	-	-	-
	_________	_________	_________	_________	_________	________
	1,928	23	-	-	-	-
Non-current assets
Foreign currency forward contracts	-	-	-	-	-	-
Interest rate swaps	-	-	182	182	103	103
	_________	_________	_________	_________	_________	________
	-	-	182	182	103	103
Current liabilities
Foreign currency forward contracts	-	-	14,176	1,021	8,335	482
Equity options	14,034	11,342	15,745	12,525	13,015	11,280
	_________	_________	_________	_________	_________	________
	14,034	11,342	29,921	13,546	21,350	11,762
Non-current liabilities
Foreign currency forward contracts	-	-	1,969	39	-	-
Equity options	175	152	1,298	400	364	324
Interest rate swaps	52	52	-	-	-	-
	_________	_________	_________	_________	_________	________
	227	204	3,267	439	364	324

Level 1 fair values are measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair values are measured using inputs, other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. Level 3 fair values are measured using inputs for the asset or liability that are not based on observable market data.

For the Group's Level 3 equity options, these are valued based on a multiple as contractually agreed of forecast future EBITDA for each relevant option. The key unobservable inputs relate to the EBITDA multiple (ranging from 8.75x to 12.5x) and forecast future EBITDA for each entity. The fair values of unobservable inputs are sensitive to changes in discount rates and future cash flow projections.

The following table shows the movements in the Group's equity option liabilities during the period:

	Total Unaudited £000
At 1 October 2018	11,604
Impact of discounting	21
Revaluation	244
Exchange differences recognised in other comprehensive income	(375)
	_________
At 31 March 2019	11,494
	_________

 

Notes to the Interim Financial Statements

15. Derivative financial instruments (continued)

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

The foreign currency forward contracts as at 31 March 2019 cover exchange exposures over the next 15 months. These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity and reclassified subsequently to the income statement.

16. Share capital

	31 March 2019 Unaudited	31 March 2018 Unaudited	30 September 2018 Audited
	£000	£000	£000
Allotted and fully-paid
741,618,456 ordinary shares of 1 penny each (31 March 2018: 269,679,563; 30 September 2018: 741,618,456)	7,416	2,697	7,416
	__________	__________	__________

On 11 July 2018, the Group issued 471,938,893 ordinary shares of 1.0p each through a 7 for 4 rights issue at 56.2p per share and raised gross proceeds of £265.2m (£255.9m net proceeds after expenses of £9.3m which were deducted from share premium). The excess of cash received over the nominal value of the shares issued of £260.5m was recorded as share premium. The net proceeds were used to part fund the acquisition of the Ascential events.

During the period, no ordinary shares of 1p each (2018: nil) were allotted pursuant to the exercise of share options.

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

 

Notes to the Interim Financial Statements

17. Net debt

	At 1 October 2018	Cash flow	Foreign exchange	At 31 March 2019
	£000	£000	£000	£000
Cash	49,649	(16,923)	158	32,884
Bank loans	(132,345)	(10,127)	639	(141,833)
Net debt	(82,696)	(27,050)	797	(108,949)

Net debt is defined as cash and cash equivalents after deducting bank loans. The Board consider net debt to be a reliable measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that can be used to assess the combined impact of the Group's cash position and its indebtedness.

18. Contingent liability

As disclosed in note 32 of the last Annual Report, during FY18 a supplier of the Group threatened to make a claim for additional rent of £28.8m in respect of the use of a venue by the Group in 2016 and 2017. The venue is in Novosibirsk, Siberia, which is a non-core market for the Group. The Group closed its business in Siberia during the period.

Since the date of the Annual Report, court proceedings have been started and the Group is engaged in litigation with the landlord of the venue. The landlord's claim is additional rent of £20m (as set out in the claim), whilst the Group is seeking a declaration from the Court that the rent claimed is unreasonable and therefore unenforceable under Russian law.

The Group's lawyers' advice is that they consider the Group likely to succeed in the litigation. Accordingly, no provision has been made as at 31 March 2019 as management does not expect any economic outflow will arise as a result of the litigation.

19. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions with key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2019. Transactions between the Group and its associates, where relevant, are disclosed below.

Trading transactions with associates

During the period ended 31 March 2019 the Group charged management fees of £0.1m (2018: £0.3m) to Sinostar ITE, the Group's joint venture operation in Hong Kong and China.

 

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 2019 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 19. 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 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 it 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 Guidance and Transparency Rules of the United Kingdom's Financial Conduct 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 consolidated 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 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 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London

14 May 2019

 

Directors and professional advisers

Directors	Richard Last, non-executive Chairman Mark Shashoua, Chief Executive Officer Andrew Beach, Chief Financial Officer Neil England, non-executive Director (resigned 24 January 2019) Nicholas Backhouse, non-executive Director (appointed 1 May 2019) Sharon Baylay, non-executive Director Stephen Puckett, non-executive Director
Company Secretary	Waterstone Company Secretaries Ltd
Registered office	ITE Group plc, 2 Kingdom Street, London, W2 6JG
Registration number	01927339
Auditor	Deloitte LLP, 2 New Street Square, London, EC4A 3BZ
Solicitors	Olswang, 90 High Holborn, London, WC1V 6XX
Principal Bankers	Barclays Bank plc, 1 Churchill Place, London, E14 5HP HSBC Bank plc, 60 Queen Victoria Street, London, EC4N 4TR Commerzbank AG, 30 Gresham St, London, ECV2 7PG Citibank, 33 Canada Square, Canary Wharf, London, E14 5BL
Company Brokers	Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT
Registrars	Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
Public Relations	FTI Consulting Limited, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD
Website	www.ite-exhibitions.com

Financial calendar

Interim dividend 2019:

Ex-dividend date                  20 June 2019

Record date                          21 June 2019

Payment date                       1 August 2019

The Group's financial calendar can be found at http://www.ite-exhibitions.com/Financial-Calendar.

 

END

 

 

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