Preliminary Results Announcement

RNS Number : 9314S

ITE Group PLC

29 November 2011

 



29 November 2011

ITE GROUP PLC

PRELIMINARY RESULTS ANNOUNCEMENT

Financial highlights

	Year to 30 September 2011	Year to 30 September 2010
Revenue	£155.5m	£113.5m
Profit before tax	£39.1m	£31.3m
Diluted earnings per share	12.6p	9.8p
Headline pre-tax profit	£51.4m	£36.6m
Headline diluted earnings per share	16.6p	11.6p
Dividend per share	6.1p	5.7p
Net cash	£5.5m	£23.0m

·      Record results reflect strong organic growth with a contribution from new acquisitions

·      Return to economic growth in the Russian & CIS markets

·      Completed three acquisitions, adding new sectors and geographies to ITE's business

·      Strong cash generation: - net cash of £5.5m at year-end after investments of circa £50m

·      Final dividend increased to 4.2p (2010: 4.0p); full year dividend of 6.1p (2010: 5.7p)

·      £93m of revenues booked for 2012: 8%+ ahead of last year on a like-for-like basis

Russell Taylor, CEO of ITE Group plc, commented:

"ITE has delivered record results reflecting a strong operational performance as we execute against our stated strategy. Over the year, we have seen a return of economic growth in our core markets, and have invested for future growth by acquiring three complementary businesses, which add strength and breadth to our existing portfolio of market leading events

 ITE operates in resilient markets and has made a good start to the current financial year. Trading is in line with our expectations and we are well placed to continue our growth, both organically and through selective acquisitions."

*     Headline pre-tax profit is defined as profit before tax, amortisation of acquired intangibles and impairment of goodwill (including associates), profits or losses arising on disposal of group undertakings, revaluation of financial liabilities in relation to put options over non controlling interests, settlement of contingent consideration and direct costs on completed and pending  acquisitions and disposals - see note 3  for details.

**   Headline diluted earnings per share is calculated using profit before amortisation of acquired intangibles and impairment of goodwill (including associates), profits or losses arising on disposal of group undertakings, revaluation of financial liabilities in relation to put options over non controlling interests, settlement of contingent consideration and direct costs on completed and pending acquisitions and disposals - see note 9 for details.

Enquiries:

Russell Taylor, Chief Executive Neil Jones, Group Finance Director	ITE Group plc	020 7596 5000
Charles Palmer/ Emma Appleton	FTI Consulting	020 7831 3113

Chairman's Review

Group Performance

The Group has delivered record financial results following a strong operating performance. Revenues of £155.5 million (2010: £113.5 million) and headline profit before tax of £51.4 million (2010: £36.6 million) have resulted from increased volume sales of 644,000m2 (2010: 491,000m2). Pre-tax profit for the year was £39.1 million (2010: £31.3 million). This growth combines a first time contribution from acquisitions made during the year with a strong recovery in the Group's principal trading market, Moscow, and with the holding of its largest biennial event, the Moscow International Oil and Gas Exhibition.

Headline diluted earnings per share of 16.6 pence is a 43% improvement on last year's comparable figure of 11.6 pence per share; fully diluted earnings per share was 12.6 pence (2010: 9.8 pence). The Group has finished the year with a positive net cash balance of £5.5 million (2010: £23.0 million) after making investments of about £50 million to expand its portfolio of events.  The Group remains highly cash generative and, as at 25 November 2011, had a net cash balance of £4.6 million, after paying for the recently announced Autoexpo acquisition.

The Group made three important acquisitions in the year, all of which were consistent with its strategy for growth in its target emerging markets. MVK, primarily a Moscow exhibition business, was acquired in December 2010 and brought good market positions in sectors where ITE had little or no representation. The Group extended its presence in the growing regional markets of Russia by acquiring an exhibition business based in Krasnodar in March 2011. In July 2011, the Group completed the acquisition of 60% of YAPIbuild which is the major construction event in Turkey.

Board and Management

The Board has seen some changes during the year.  Malcolm Wall moved abroad and consequently stepped down as a non-executive director at the end of August 2011. I would like to thank Malcolm for his contribution over the last five years and particularly for chairing the Remuneration Committee since 2008. Linda Jensen joined the Board as a non-executive director in July 2011.  Linda has relevant and current experience having worked in Russia for five years and is now running a media business based in Eastern Europe. She brings to the Board substantial emerging market business knowledge. Neil England, who has been a non-executive director of the Group since 2008, has taken on the role as Chairman of the Remuneration Committee.

To support its growth strategy, the Board has worked to strengthen further the executive and senior management team. Outstanding, committed employees support the management team throughout our territories and the Board would like to extend its thanks and appreciation for their efforts over the past year.

The Board fully supports the updated UK Corporate Governance Code and recognises that good governance supports the long-term health of the Group. We are conscious of our stewardship responsibilities including our role in setting values which underpin our Group culture.  As Chairman, I am mindful of my personal responsibility for leading the Board and ensuring it operates effectively.  The Board Effectiveness Review carried out during the year confirmed the Board and its Committees continue to work effectively and the insights provided have been used to set a clear action plan for the year ahead

Dividend

The Board has a good record of maintaining a progressive dividend policy while ensuring earnings cover of more than two times across the biennial cycle. The interim dividend was increased from 1.7 pence to 1.9 pence and the proposed final dividend is 4.2 pence (2010: 4.0 pence), making a full dividend for the year of 6.1 pence (2010: 5.7 pence). The final dividend will be paid on 13 February 2012.

Outlook

The Group has enjoyed a strong recovery in its core Moscow market. The regional markets in Russia have also enjoyed a recovery and the adjacent CIS markets are now showing improving results, albeit not yet as strongly as in Russia.  There is expected to be further economic growth in Russia this year as well as a continuation of the recovery in the CIS markets.

At 25 November, forward bookings are £93 million which is in line with the Board's expectations and on a like-for-like basis represents growth of circa 8% over last year's revenues booked at the same time. The Group has a strong portfolio of exhibitions in emerging and growing markets. With its cash flow and strong balance sheet, the Group is in an excellent position to continue to grow its business both organically and through selective acquisitions. The Board remains focused on executing its strategy and, whilst ITE is not immune to changes in the world economy, the Board remains confident of the Group's future prospects.

Iain Paterson

Chief Executive's Statement

The Group's performance

The Group has delivered a strong financial and operating performance in a year which saw the momentum of last year's nascent recovery in the Moscow business continuing through the year and spreading to related CIS markets. Trading conditions have been strongest in the Moscow exhibition market which accounts for circa 51% of the Group's annual revenues. The Group's like- for- like volume sales reflect this improved trading environment with a 15% increase over last year. In addition, the Group completed three important acquisitions in the year. These acquisitions and the reported return to economic growth in its markets have helped ITE to become a broader and stronger business.

Revenues for the year increased by 37% to £155.5m (2010: £113.5m). A first time contribution from the newly acquired businesses accounted for £16m of the increase and £26m was from organic growth and the biennially recurring Moscow International Oil and Gas Exhibition. On a like for like basis revenues grew 18% year on year. The effect of currencies on the Group's revenues was negligible as average Euro-Sterling exchange rates over the year were largely unchanged from the previous year.  The Group's reduced gross margin of 48% has been affected by the addition of lower yielding event portfolios in the newly acquired businesses. The additional overhead costs associated with adding two large portfolios of events has contributed to an increase in administrative expenses before amortisation costs to £24.1m (2010: £19.9m).  The net impact of these changes on operating profit margins (before amortisation and transaction costs) has been an increase from 32% to 33%.

Business development

The Group has successfully completed three significant acquisitions in the last year. In December 2010, the Group announced the acquisition of the MVK portfolio of events in Moscow. This portfolio of events had little overlap with ITE's existing Moscow portfolio and has provided the Group with access to new sectors as well as a broader exposure to the Russian economy.  The principal events acquired through MVK include packaging, printing and furniture events, which can now be counted alongside ITE's traditional Moscow sector strengths in construction, oil and gas, travel and tourism, food, transport and security. The new events have local Russian exhibitors as their main customer base and ITE now has the opportunity to increase the international customer base for these events. The MVK portfolio contributed £9.2m of revenue and £3.7m of profits before tax to the 2011 result.

In March 2011 the Group announced the acquisition of a regional exhibition business in Krasnodar that is located in the South-West of Russia. Krasnodar is in an increasingly prosperous region  and is near to the cities of Sochi (Winter Olympics venue in 2014 and FIFA world cup venue in 2018) and Rostov-on-Don. The exhibitions acquired reflect the local industries and agricultural bias of the region. The biggest events are agriculture, construction, wine and tourism but overall the business runs more than 20 exhibitions covering all aspects of the local economy. ITE is now the principal organiser both in the local venue and the region. This expansion provides a more balanced geographic exposure to Russia complementing the existing businesses operating in St Petersburg, Moscow and Novosibirsk. The Krasnodar portfolio contributed £4.3m of revenue and £1.2m of profits before tax to the 2011 result.

In July 2011 ITE announced the acquisition of 60% of the leading construction events portfolio in Turkey. The Yapi portfolio comprises the largest and longest running construction exhibition in Istanbul, Yapibuild, together with two smaller regional exhibitions taking place in Izmir and Ankara. Construction is one of Turkey's main industries and strongest sectors.  There is good potential for growth in these exhibitions as well as synergy with the rest of the ITE's portfolio, especially as Russia and CIS remain strong export markets for Turkish construction businesses.  The Yapi portfolio contributed £0.6m of revenue and £0.1m of operating profit to the 2011 result. 

Expanding ITE's portfolio has created a number of opportunities to leverage the customer base and achieve synergies across the Group. Within the existing markets the aim is to replicate some of the new sectors acquired in Moscow into the other regional Russian and CIS markets. There are also added benefits from cross marketing the Moscow customer and visitor base into the new regional Russian markets and vice versa. The opportunities to extract additional value from the steps taken this year mean that the main focus of the Group for 2012 in Russia will be on consolidation and integration.

The acquisition of the MVK portfolio triggered an unexpected renegotiation of ITE's existing trading terms with the venue.  As a result, in March 2011, ITE Moscow took the decision to relocate a number of its leading events from the Crocus venue to more centrally located venues. The move will provide a more stable future for these events, but in the short term the scope for growth of some of the events could be restricted. Bookings for these re-located events are currently progressing in line with management's expectations.

Alongside this expansion of the business we have continued to develop the strength and depth of its management team as well as the Group's infrastructure. There are a number of initiatives to develop the Group's management and the internal communication systems to reflect the expanded size of the business.  A Group Human Resources Director has been recruited to bring more focus on Group wide talent development and succession planning.

While ITE's focus in Russia and CIS will be largely on developing the newly acquired businesses, the Group will continue to look for opportunities to expand the business model both in market and by diversifying geographically. There are opportunities to increase the Group sales from Asia into ITE's existing markets through expanding the Group's network of international sales offices in the region beyond the Beijing office.

Strategy

 ITE's primary business objectives are to:

·      Create sustainable growth in headline earnings per share; and

·      Create and maintain sustainable positions of market leadership in the exhibition business in emerging markets.

ITE's strategic priorities for achieving these objectives are:

(i)            to continue to strengthen and develop its existing positions of market leadership

(ii)           to expand its business model into new sectors and  geographies where there is potential to develop strong market positions

(iii)         to grow and improve its portfolio of international exhibition brands

(iv)         to invest in the development of management talent in ITE.

ITE's performance against its strategic objectives is set out below:

(i)            To continue to strengthen and develop its existing positions of market leadership:

ITE's positions of market leadership are founded on its strength in international sales, its strong brands, its established local offices and its longstanding relationships with venues.

International sales strength 

ITE's strength in international sales differentiates it from most of its competition in Russia and the related CIS markets. Through its subsidiary sales offices the Group has established a loyal customer base and a specialism in promoting sales into ITE's Russian and CIS exhibitions. In 2011 the total net meters sold by the Group's international sales offices increased by 7% to 98,000m2. As a proportion of total sales the international element has fallen from 41% to 38%, reflecting the acquisition of new businesses which are mostly weighted towards local sales. The Group has invested in building up its sales offices this year and expects to see an increase in international sales next year. This year the majority of sales were generated by its London office 12%, its German office 4%, its Chinese office 2% and its Turkish office 2%.

ITE's market leading brands

ITE has established strong brand identity in certain exhibition sectors. In particular, the Build brand in construction, the Oil & Gas events brand, the ITE Travel exhibition and World Food brands all have strong reputations as leading events in the Russian and CIS markets earned through more than fifteen years of sustained good performance. The Group is working to establish more recognition for these brands outside their current identification with the Russian and CIS market places. There are also a number of new and developing local brands in security, packaging, furniture, printing and mining events. The Group is also working to consolidate and establish these brands more visibly in the international exhibition world.

Enhancing local office strength

ITE's brands have built their reputation through sustained delivery of successful exhibitions to customers. The foundation of this are ITE's local offices which, like its exhibitions and brands, have been in place for over 15 years and today employ over 1,000 staff who organise the details of staging an exhibition. Critically they own and manage the database of visitors necessary for making an exhibition successful for ITE's customers. ITE's local office skills in Russia and CIS are a competitive advantage over other international organisers and a barrier to entry for new organisers wishing to run events in these markets.  ITE continues to strengthen its local office presence through investment in infrastructure and training its staff. There is a high level of equity ownership in the Group with more than 56% of staff participating in equity schemes of some description. 

Maintaining venue relationships

ITE has established long-standing relationships with the venues that host its exhibitions. Historically ITE has supported the development of venue facilities which in turn has helped the Group's exhibitions to grow. Through this ITE has acquired the rights to run its main exhibition themes in its chosen venues at the time of its choice. ITE has continued to work on maintaining its good relationships, though as noted earlier there has been a significant relocation of events between venues in Moscow this year. This year ITE have reached agreement to be the anchor tenant of a new 14,000m2 facility in Novosibirsk.  However, there will be new opportunities in the future with a new venue development expected in St Petersburg by 2014, and possible new venue developments mooted in Moscow by 2016.

 (ii)          To expand the business model into new sectors and geographies where there is potential to develop strong market positions.

In existing markets this strategy means targeting new sectors or regions in which to acquire or develop businesses where there is potential for the participation of international exhibitors. In new markets ITE is targeting the development of exhibition businesses where there is clear opportunity for strong future growth.

The Group has expanded the sector exposure of its Moscow business through the acquisition of the MVK portfolio of events and in Turkey through the acquisition of Yapibuild. The MVK portfolio of events has no overlap with ITE's existing Moscow portfolio and brings to the Group strength in the packaging, printing and furniture sectors. Construction is in an existing Group sector, and Yapibuild acquisition extends the Group's representation to a new market. ITE also extended its regional business exposure in Russia through the acquisition of an exhibition business in Krasnodar. The exhibition business acquired reflects the local industries and agricultural bias of the region. The largest events are in construction, agriculture and tourism.

(iii)         To grow and improve its portfolio of international brands.

The Group's management has been developing initiatives to improve the strength of ITE's existing international brands and to improve the international awareness of its strong local brands. By developing the international recognition and strength of its brands ITE improves the Group's ability to 'clone' its events into new geographies.

(iv)          To invest in the development of management talent in ITE.

ITE has benefitted over the years from the commitment, loyalty and expertise of its employees. As ITE grows in its staff numbers and geographic spread it is important to maintain its culture. The Group has continued with last year's process of identifying, training and developing selected individuals to ensure that quality management is generated internally in the future.

Key Performance Indicators

The key performance indicators that ITE uses to measure progress against its objectives and the performance this year are set out below:

To increase revenues from existing exhibition portfolio	Sterling revenues from existing 'like-for-like' products have increased by 18% in the year under review. This reflects an economic recovery in the Group's principal markets.
To increase the annually recurring volume base of ITE's exhibition business.	The annually recurring volume base of the exhibition business increased by 35% in 2011 from 434,000m2 to 587,000m2. The net increase in volume sales is comprised of a 15% increase in like for like sales of 63,000m2, and an additional 90,000m2 from the new acquisitions made in the year. Additional volume was added through 43,000m2 of acquired events in Moscow (MVK) and 33,000m2 of new events in Krasnodar. In addition to events taking place in the year the new acquisitions are expected to generate another 40,000m2 of annually recurring exhibition sales in the next financial year when the full year effect of the new businesses is reported.
To make incremental bolt on acquisitions in support of the Group's objectives	In December 2010 the Group acquired a portfolio of complementary exhibition subjects in Moscow through the acquisition of MVK, a Moscow based exhibition business. In March 2011 the Group acquired an exhibition organising business in Krasnodar, South Russia. The acquisition is complementary to ITE's existing Russian exhibition organising offices in St Petersburg, Moscow and Novosibirsk.  In July 2011 ITE acquired Yapibuild, a portfolio of leading construction events in Turkey.
Secure forward venue rights for significant exhibitions	Of ITE's top ten exhibitions and conferences, 3 have secured rights for 3 years, 5 for 2 years and 2 for 1 year. The Group's management are engaged in an ongoing process of agreeing venue terms to ensure this objective is met.  These ten exhibitions represent 52% of revenues.

Through its international sales expertise, strong brands, local office strength and venue relationships ITE has earned a unique position in Russia and the CIS market place.  ITE's established position in its core markets, its brands and its venue relationships make it hard for new entrants to compete successfully with ITE's events.  Two of these key assets, the brands and the international sales skills, are portable and will help ITE establish itself in new emerging and growth markets.

Russell Taylor

Chief Executive Officer

Trading summary 2011

                                                                                                Revenue

					2011		2010		%		%
					£m		£m		change		Like-for-Like change #
		Russia			105,650		66,130		+60%		+25%
		Central Asia & Caucasus			21,853		19,622		+11%		+11%
		Eastern & Southern Europe			17,940		15,271		+17%		+11%
		UK & Western Europe			8,950		8,188		+9%		+9%
		Rest of World			1,063		4,336*		-75%		-66%
		Total			155,456		113,547		+37%		+18%
	* includes non-recurring revenue from the operation of third party event LNG 16 in 2010

# like-for-like measures the change over the previous year after excluding biennial events and acquired events impacting the results for the first time.

This has been a record year for ITE with the results reflecting a return to economic growth in the Group's markets, a first time contribution from newly acquired businesses and the positive effect of the Group's stronger biennial events running in the year. In total the Group saw volume sales increase by 31% to 644,000m2 and revenues by 37% to £155.5m. On a like-for-like basis, volume sales grew by 15% and revenues grew by 18%. The Group's largest events are the leading international events in their territory and their sector. Such large international events respond strongly and quickly when economic recovery begins, which is evidenced in the Group's trading performance this year.

The year has been one of improving trading conditions, most notably in Moscow which was in full recovery from the beginning of the financial year and has been operating in a 'business as usual' environment from the middle of 2011. The Group's other Russian and CIS markets have followed this trend, albeit at a slower pace, and the Group is now experiencing a recovery in these markets.

Overall in 2011 the Group ran 211 events (2010: 167). The increase in the number of events a mix of acquisitions and new launches. A detailed analysis of volumes, revenues and gross profits from the Group's exhibition and conference activities is detailed below:

			Square Metres Sold			Revenue		Gross Profit		Average yield
			(000)			£'m		£'m		Per m2
2010	All events		491			112		55
	Non-annual		(57)			(5)		(1)
2010	Annually recurring		434			107		54		247
	Acquisitions		90			16		7
	Net Growth		63			19		8
2011	Annually recurring		587			142		69		242
	Non-annual		57			12		6
2011	All events		644			154		75

Russia

In Russia ITE now operates through four offices, Moscow, St. Petersburg, Novosibirsk and from March this year Krasnodar, a city in the south-west of Russia. During the year the Group held 104 events in Russia, with total volume sales of 344,500m2 (2010: 205,300m2). Revenues of £106 million were 60% higher than last year, reflecting a combination of organic growth, acquisitions impacting for the first time in the period and the return of the biennial Moscow International Oil and Gas event. On a like-for-like basis volume sales in Russia were up 19% and revenues 25%.

The Russian economy is growing at a good pace, with GDP growth in excess of 4% in 2011 and similar levels forecast for 2012. This backdrop of economic growth allied to the late cycle nature of the industry and the Group's market leading events has resulted in an improved performance for the region's exhibitions. This has been reflected in all the Group's Russian offices with Moscow, the Group's principal operation, leading the way and the smaller regional offices following. Overall, sales to local exhibitors have recovered more quickly than international exhibitors and have been the driving force behind the growth.

In Moscow where seven of the Group's largest events are held, the recovery was well underway from the beginning of the financial year supporting a strong performance from the first half events. The Moscow International Travel and Tourism exhibition posted a record performance with volume sales of 21,000m2 (2010: 19,500). The strong growth of this event was despite a reduction in space from leading Southern European travel destinations such as Greece and Italy, where Government support (to their own national exhibitors) was affected by austerity measures. The second half of the year had already experienced a recovery in the previous year and saw further growth with the Group's leading events performing strongly. TransRussia, the Group's leading logistics event has weathered the recession well and volume sales this year increased by 18% to 8,700m2 (2010: 7,400m2). There was an excellent recovery for the Group's construction event, Mosbuild, which grew volumes sales by 24% to 77,600m2 (2010: 62,700m2). The event remains the clear market leader in the Russian construction sector, but following a change in venue arrangements this year, future growth may be restricted in the short-term. In June the Group held the biennial Moscow International Oil & Gas Exhibition, which recorded exceptional growth with volume sales increasing by 32% to 22,800m2 (2009: 17,300m2) and produced record revenues. In September WorldFood Moscow, which had been the first of the Group's large events to return to growth last year, posted a further 9% volume increase  to 22,800m2 (2010: 20,900m2).

In December 2010, the Group purchased the exhibition portfolio of MVK, at the time the third largest portfolio of exhibitions by volume operating in Moscow. On acquisition the operations of MVK were merged with the Group's existing Moscow business, and this proved invaluable in ensuring a very smooth integration of the business. However, the acquisition of MVK triggered a change in the relationship with the Crocus venue who announced their intention to run events competitive to some of the ITE / MVK events held at the venue. Consequently ITE has re-located some events to other venues in Moscow for 2012. MVK brings to the Group a number of new sectors including two events which now feature within the Group's ten most profitable events. EuroExpoMebel takes place each May and is one of Moscow's largest furniture events with volume sales of 14,200m2, and Rosupak which takes place in June serves the packaging industry and this year recorded volumes sales of 11,500m2. Both results were ahead of initial expectations.

In St.Petersburg, where the recovery lagged Moscow by six months, trading was markedly improved over the previous year with volume sales up 20% and revenues up by 14%. There was good growth across all sectors, but most importantly for this construction dominated portfolio, a strong return to growth for Interstroyexpo, the region's leading event, which improved its volume sales by 34% to 8,600m2 (2010: 6,400m2). The St Petersburg business has not yet recovered its 2008 market size, but further recovery is expected albeit at a slower pace than this year. A new venue development is planned for St Petersburg due for completion in 2014.

Sibfair, the Group's operation in Novosibirsk, Siberia, held 34 events during the year with volume sales of 37,500 m2 (2010: 36,000), an improvement of 4% over the previous year. The region had a similar trading pattern to that of St. Petersburg, with growth improving as the year progressed, although the broader based portfolio of this region which had protected it during the downturn resulted in less marked levels of rebound growth. ITE has recently agreed terms to become the anchor tenant of a new 14,000 m2 state of the art exhibition centre located close to the airport. The additional international quality space is expected to provide a platform for growth in the Group's exhibition business.

In March 2011 the Group purchased Karsnodar Expo, the principal organizer of the area's exhibitions. Krasnodar is in the south west of Russia, will be one of the host cities for the 2018 FIFA world cup and is located just two hours from Sochi where the 2014 winter Olympics will take place. The region which is the centre of the Russian agricultural industry is one of the most prosperous outside Moscow and is now attracting increasing numbers of international manufacturers. The exhibition portfolio covers a broad range of sectors the largest events being in the agriculture and construction sectors. During the seven months under ITE ownership the office ran 17 events the largest of which was the construction event. In total the new business contributed volume sales of over 32,000m2 and generated over £4m in revenues.

Central Asia and the Caucasus

ITE's principal offices in Central Asia are in Kazakhstan, Azerbaijan and Uzbekistan. This year ITE organized a total of 70 events across these territories delivering total volume sales of 67,000m2, an increase of 11% over the previous year. Revenues of £22 million also represented an increase of 11% over the previous year.

All of the economies in this region are dependent on Oil and Gas for their overseas earnings and economic wealth. The return to oil prices in excess of $100 a barrel has increased confidence within these economies and helped fuel good economic growth, which has been reflected in the growth of ITE's business in the region this year.

Kazakhstan

Kazakhstan began to emerge from economic recession in early 2010 with accelerated growth in 2011, delivering volume growth of 7% and revenue growth of 5%. The late-cycle nature of the exhibition industry means that this growth is only now being fully reflected in the performance of the Kazakhstan business.

The region has two principal sectors of operation, oil and gas and construction. The region's largest event is the Kazakhstan Oil and Gas exhibition which took place in Almaty in October 2010 and achieved sales of 7,800m2, similar to the prior year performance. The related conference was affected by a competitive conference in Astana and revenues were circa 15% lower than the previous year. However, ITE has since acquired the rights to run the competitive conference, which has helped an improved performance in the 2011 event.  The construction sector is recovering slowly after the property crash of 2008. Kazbuild, ITE's local construction event grew by 9% to 5,500m2, but is still considerably below its 2007 peak.

ITE continues to enjoy a good working relationship with Atakent, the principal venue in Almaty. At present Atakent offers the Group sufficient space in which to operate its events.

Azerbaijan

ITE became the anchor tenant at the new 20,000m2 exhibition centre in June 2010. This new larger venue has afforded the Group the opportunity to grow previously space constrained events and to launch new events in new sectors such as automotive and plastics. This year the region achieved volume sales of 18,600m2 a 23% increase over the previous year and advanced revenues by over 30%.

Uzbekistan

ITE's Uzbekistan business showed steady growth in 2011, following very strong growth in 2010. The Oil and Gas event remains the regions dominant event, accounting for over one third of revenues. Overall the region sold 10,100m2 an improvement of 4% on a like-for-like basis.

Eastern & Southern Europe

The Eastern and Southern Europe region is represented by the Group's offices in Turkey and Ukraine. Overall the region sold 185,900m2 in 2011 (2010: 178,600m2) which on a like-for- like basis represented an increase of 12% in volumes and 11% in revenues. Both regions experienced solid growth, with Ukraine reflecting the benefit of some economic stability. In Turkey, which was relatively unaffected by the economic recession, the Group acquired 60% of the Yapibuild portfolio, which comprises the leading construction events in the Turkish market. The acquisition strengthens ITE's leading position in the building materials and construction sectors and is consistent the Group's strategy of building market leading positions in its core markets and sectors.

Ukraine

Despite the recent economic and political difficulties, Ukraine remains an attractive market for ITE. The country has a population in excess of 45 million and forecast GDP growth of 5% per annum in the short to medium term. It has significant natural resources, notably iron ore and coal, plus recent findings of shale gas reserves which provide opportunities for sustained growth that should impact positively on ITE's operations in this country.

Following a return to steady economic growth in 2011, the Group's Ukrainian business delivered modest growth of 5% with volume sales for the year of 33,600m2 (2010: 32,000m2). The largest event in the portfolio is Aquatherm (serving the heating, ventilation and air conditioning sectors), acquired by the Group in 2010. This event continued to grow in 2011 delivering volume sales of 15,300m2 (2010: 14,200m2).

Turkey

The Turkish economy is continuing to grow and the country is now established in the second tier of emerging market economies. These economies are seen as offering potential for long-term above average economic growth, and are characterized by a growing aspirational middle class population, expected to drive consumer demand. The market is characterised by two types of exhibitions, those that principally serve the domestic market and are dominated by local trade associations which tend to be low cost/low margin events, and those that attract international exhibitors  which tend to be higher yielding/higher margin events. ITE's portfolio of events has until recently been biased toward the domestic market. The acquisition of EMITT (East Mediterranean International Travel & Tourism event) in 2009 and of Yapibuild in July this year has changed the composition of the Turkish business. In the medium term the Group aims to raise the margins in its more domestic events by increasing the level of international participation

During 2011, the existing portfolio performed well with volume sales of 152,400 m2 (2010: 153,900m2) these figures include some biennial events, and on a like-for-like basis volume sales were ahead of last year by 5% and revenues by 7%. The most significant contribution was from the biennial TATEF (industrial metal working) event, which offset the non-occurrence of the biennial Ankomak event this year. The exhibition industry in Turkey is fragmented and offers the Group further opportunities for investment in events.

UK & Western Europe

Despite static economic conditions in the UK, the Group's fashion business continued to perform well. MODA is the leading midmarket fashion event for Womenswear, Menswear, Footwear and Lingerie and runs twice a year in Birmingham. Bubble is a niche high-end Childrenswear event which runs twice a year in London. Overall these events grew by 6% in volumes and 13% in revenues as the business continued to gain market share. The business continues to look for opportunities to establish itself in other niche fashion sectors and in July 2011 took a 40% stake in Scoop, a designer lead Womenswear event based in central London.

Rest of the World

The Group's operations in this Division are in India, which has potential for significant organic growth as its exhibition industry is currently sub-size for its economy. The business is focused on organic development, and this year successfully ran Petrotech the leading Indian Oil and Gas event, and launched DelhiBuild which took place in September. 2012 will see the launch of a series of regional paper events and the return of the biennial event, Paperex, which remains the leading event in the office's portfolio.

The Group's revenues in Rest of the World are less than last year when the Group ran an international conference on Liquefied Natural Gas (LNG 16) in Algeria on behalf of the world body that owns the conference.

Finance

Revenue and gross profit

Revenue for the year was £155.5 million (2010: £113.5 million) and gross profits for the year were £74.9million (2010: £55.3million).

Administrative expenses across the Group increased to £35.1 million from £25.8 million in the previous year. Administrative expenses include significant non-cash items, including an amortisation charge of £10.7 million  on acquired intangibles (2010: £5.8 million) reflecting the impact of acquisitions made during the year together with a full-year's charge for acquisitions made during 2010, a charge for share-based payments of £1.7 million (2010: £1.4 million), foreign exchange losses of £0.2 million (2010: loss of £0.1 million) arising on the translation of foreign currency denominated assets held by overseas Group companies and an impairment charge of £0.1m against a small event in Turkey.

Excluding these non-cash items administrative expenses increased by £3.9 million to £22.4 million (2010: £18.5 million), with £1.4 million being overheads relating to acquisitions made during the year, and £0.3 million being an increase in transaction costs relating to completed and pending acquisitions, which totaled £1.2 million in 2011 (2010: £0.9 million). Overall, Group administrative expenses excluding non-cash items and transaction related costs represented 14% of revenue (2010: 16%).

Operating profit was £40.0 million against a prior year profit of £29.9 million, resulting in net operating margins of 26% (2010: 26%) for the year. The result in both years is impacted by the significant increase in amortisation and impairment charges. After adjusting for amortisation on acquired intangibles and impairment operating profit for this year is £50.8 million (2010: £35.8 million), yielding an operating margin of 33% (2010: 32%)

Headline pre-tax profit this year was £51.4 million (2010: £36.6 million).

Other operating income 0.3million (2010: £0.3million)

Other operating income represents rental income earned from subletting surplus office space, principally at ITE's London office.

Investment revenue £0.6million (2010: £1.1million)

Investment revenue came primarily from interest on bank deposits which increased to £0.4m this year (2010: £0.3 million). Gains on derivative financial instruments were £14,000 during the year compared to £0.2 million in 2010.

Finance costs £1.5 million (2010: £0.6 million)

Finance costs of £1.5 million (2010: £0.6 million) represent the interest cost of the Group's borrowings in Euro and US Dollar (£0.7 million), bank charges (£0.3 million) and the additional cost of the exercise of the first part of the Ekin Fuar put option (£0.3 million). This additional cost results from a better than anticipated performance of Ekin Fuar in comparison to the Group's expectations at the time of acquisition.

The Group enters into currency borrowing arrangements as part of its currency hedging activity and at 30 September 2011 the Group had currency borrowings in the form of overdrafts of €13.3 million, and US$3.7million, equivalent to a total of £13.9 million (2010: £10.2 million). In addition the Group had term loans drawn in Euros totalling £14.5 million which were used to finance the acquisition of MVK in December 2011.

Tax charge

The tax charge of £8.3 million represents 21% of profit before tax (2010: 23%). The Group continues to focus on tax efficiency across the Group, with the reduction in the tax rate this year resulting from further effects of the lowering of underlying corporation tax rates within the main operating economies, a reduction in the tax charged on the repatriation of overseas profits and the release of provisions as a result of agreeing prior year tax positions in the UK. The lower levels of underlying corporation tax, if sustained, will continue to benefit the Group's tax rate in the future.

Earnings per share

Basic earnings per share increased by 28% to 12.8p (2010: 10.0p). Diluted earnings per share increased to 12.6p (2010: 9.8p).

The Group achieved headline diluted earnings per share of 16.6p (2010: 11.6p). Headline diluted earnings per share are based upon profit for the financial year attributable to equity holders of the parent, before amortisation and impairment of acquired intangible assets and goodwill, any profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to put options over non controlling interests and transaction costs relating to completed and pending acquisitions and disposals.

Dividends

The Group has recommended a final dividend of 4.2p per share for 2011, to bring the total dividend for the year to 6.1p per share (2010: 5.7p).

Return to shareholders

ITE is committed to maximising shareholder value through a long-term progressive dividend policy, set against a principle of maintaining at least two times cover across the biennial cycle, together with the re-investment of profits into expanding the business. Since 2007 the company has increased the dividend by 36% from 4.5p per share to a record level of 6.1p per share in 2011.

Cash flow

Cash generated from operations in the year was £65.1 million, representing 127% of headline profits (2010: £49.7 million, 136%).  The principal applications of cash were £46.5 million applied to acquisitions (net of cash acquired) (2010: £15.6 million), £6.9million applied to new venue loans and advances (2010: £9.2 million); £11.6 million was paid in tax (2010: £7.4 million); and £14.1 million was distributed as dividends (2010: £13.3 million). The net decrease in cash balances over the year was £17.5 million, with the Group holding £5.5million in net cash at 30 September 2011 (2010: £23.0 million).

Acquisitions

On 17 December 2010, ITE acquired 100% of the issued share capital of International Exhibition Company CJSC (MVK) for £27.4 million in cash. During the financial year this group of Moscow based exhibitions contributed revenue of £9.2 million and £3.7 million profit before interest charges to the Group's headline results.

On 3 March 2011, ITE acquired 100% of the issued share capital of Krasnodar Expo (Krasnodar) for £8.8 million of which £4.6 million was satisfied in cash, the vendor retained assets valued at £2.0 million and a further contingent consideration payment of £2.1 million. Total contingent consideration of £2.1m is paid in two tranches, £0.9 million in June 2011 and a further £1.2 million is expected to be paid in December 2011. During the financial year this group of exhibitions contributed revenue £4.3 million and £1.2 million profit before interest charges to the Group's headline results.

On 12 July 2011, ITE acquired 60% of the issued share capital of YEMF Fuar (YAPI) for £15.5 million, £12.5 million was satisfied in cash and £3.1 million is to be paid in contingent consideration based upon the results of the business for the year ended 31 December 2011. During the financial year this group of Turkish based construction exhibitions contributed revenues of £0.6 million and £0.1million profit before interest charges to the Group's results.

During the year the Group paid £1.6 million in deferred and contingent consideration in relation to acquisitions made in prior years. As at 30 September 2011 the Group had a contingent consideration liability of £4.1 million, the majority of which it expects to pay during 2012.

Balance Sheet

The Group's consolidated balance sheet at 30 September 2011 is summarised in the table below:

	Assets	Liabilities	Net assets
	£m	£m	£m
Goodwill and intangibles	129.6	0.0	129.6
Property, plant and equipment	2.1	0.0	2.1
Venue advances	10.1	0.0	10.1
Cash	34.0	(13.9)	20.1
Current assets and liabilities excluding cash	46.7	(89.1)	(42.4)
Provisions - non current	0.0	(0.9)	(0.9)
Deferred tax	2.1	(13.1)	(11.0)
Bank Loan	0.0	(14.5)	(14.5)
Other non-current assets and liabilities	0.5	(12.7)	(12.2)
Total as at 30 September 2011	225.1	(144.2)	80.9
Total as at 30 September 2010	162.4	(89.8)	72.6

Net assets increased by £8.3 million to £80.9 million.  The main changes are in goodwill and intangibles (an increase of £50.1 million) and trade receivables (an increase of £5.7 million) offset by deferred income (an increase of £12.7 million) and a bank loan of £14.5 million.

Investment and capital expenditure

The Group's capital expenditure on plant and equipment for the year was £1.3 million (2010: £1.1 million) and included exhibition equipment, office fixtures and fittings and computer equipment & associated software.

Venue arrangements

The Group has long term arrangements with its principal venues in its main markets setting out ITE's rights over future venue use and pricing.

Expocentris ITE's principal venue in Moscow and hosts seven of its largest exhibitions including MosBuild, Moscow International Oil & Gas exhibition, Moscow International Travel & Tourism, World Food Moscow, TransRussia, Moscow International Protection & Security Exhibition.  ITE has an agreement with Expocentr which secures the Group's rights to conduct its exhibitions at the venue on agreed rates until 2013.

VVC is located in Central Moscow and hosts a number of events acquired with the MVK portfolio purchased December 2010, including Euroexpomebel and Intercomplekt. ITE has an agreement with VVC, providing rights to hold its exhibitions at the venue on agreed rates to 2012.

Lenexpois located in St Petersburg and hosts the recently acquired Interstroyexpo and Baltic Building Week events.  ITE has an agreement with Lenexpo, providing rights to hold its exhibitions at the venue on agreed rates to 2012.

Atakent Exhibition Centre is the largest venue in Almaty, Kazakhstan and hosts the Kazakhstan International Oil & Gas events and KazBuild exhibitions.  ITE's agreement with Atakent confirms its rights to hold its exhibitions at the venue on agreed rates until 2017.

CNR is the principal venue in Istanbul, located close to the City's international airport, and holds all but one of the Group's Turkish exhibitions. ITE has an agreement with CNR which secures its rights to conduct its exhibitions at the venue on agreed rates until 2014.

 The International Exhibition Centre (IEC) is the principal venue in Kyiv and hosts all of the Group's Ukrainian events, including Aquatherm exhibition. ITE has an agreement with IEC which secures its rights to conduct its exhibitions at the venue until 2014.

The Group funds the development of venues and facilities where improvements will enhance the prospects and profitability of its business.  The funding can take the form of a prepayment of future venue fees ('advance payment'), or a loan which can be repaid by cash or by offset against future venue fees ('venue loan').  Generally the funding brings rights over future venue use and advantageous pricing arrangements through long term agreements.  Venue loans and advance payments are included in the Balance Sheet under non-current and current assets.

At 30 September 2011, the Group's Sterling value of the outstanding balances of advance payments and venue loans was £10.1million (2010: £10.5million) as follows:

	30-Sep-10		New	Repayments	Forex	30-Sep-11
	£m		£m	£m	£m	£m
Kyiv		0.9	1.1	(0.1)	(0.1)	1.8
Almaty		0.7	3.6	(2.3)	(0.2)	1.8
St Petersburg		0.4	0.0	(0.1)	0.0	0.3
Uzbekistan		0.3	0.0	(0.1)	0.0	0.2
Azerbaijan		0.0	0.8	(0.2)	0.0	0.6
Crocus (Moscow)		1.2	(0.4)	(0.5)	0.0	0.3
CNR (Istanbul)		7.0	1.6	(3.1)	(0.4)	5.1
Total		10.5	6.7	(6.4)	(0.7)	10.1

Capital

During the year the Company issued 256,547 ordinary shares of 1p in the year. All of the total new issues were pursuant to the exercise of options and yielded aggregate consideration of £38,478. During the year the Company made no additional purchases of shares for the Employees Share Option Trust ("ESOT"). As at 30 September 2011 ESOT held 8,102,687 (3.3%) of the Company's issued share capital (2010: 9,978,386; 4.0%). 

Treasury

During the year, the Group experienced a net foreign exchange loss of £0.2 million (2010: loss of £0.1 million). The exchange rate for the Euro at 30 September 2011 was €1.15:£1(30 September 2010: €1.16:£1); the exchange rate for the US Dollar at 30 September 2011 was $1.56:£1 (30 September 2010: $1.58:£1).

During the year, 61% of the Group's sales were priced in Euros, 19% in Rubles, 8% in GBP, 4% in US Dollars, the balance being in various local currencies.  Overall 74% of the Group's cash receipts for the period were collected in "hard" currency (Sterling, Dollars or Euros) and 26% was collected in various local currencies, the majority being Rubles.

The Group uses derivative instruments and currency borrowings to protect itself against the effect of currency fluctuations on a proportion of its sales and its balance sheet. The Group's policy on derivative instruments is that:

-               it will hedge no more than 75% of the value of anticipated hard currency collated sales; and

-               it will only enter into derivative transactions up to 36 months ahead.

At 30 September 2011, the Group had entered into forward contracts to sell Euros for Sterling between October 2011 and August 2014.  The value of the contracts is €94.65 million at an average rate of €1.17:£1.  These instruments are designated as hedging instruments.

During the year the Group entered  into currency borrowing arrangements to minimise its exposure to foreign exchange risk on trade receivables. At 30 September 2011 the Group had borrowings of €13.3 million, and US$3.7 million, through an overdraft facility and €11 million and £4.9 million through a term facility.

The Group finances its operations through cash holdings and banking facilities. The objective of the Group is to maximise investment income and minimise interest costs, bearing in mind its liquidity requirements.

For short-term debt, such as overdraft facilities or debt with a term of less than 12 months, fixed or floating rates of interest are used.  For debt with a term of greater than 12 months, when the borrowing is not covered by existing cash holdings, it is policy that at least 50% must have fixed rates of interest so as to minimise the Group's exposure to interest rate movements. It is Group policy that its cash balances are not invested in instruments that would put the capital value at risk.  All invested funds have a determinable rate of interest.

During the year the Group entered into a 24 month multi currency facility agreement with Barclays Bank, allowing it to borrow up to £15m. The facility expires in November 2012.

Liquidity risk

The Group policy is to ensure continuity of funding for operational needs through cash deposits and debt facilities as appropriate.  The key requirement for the business is to maintain flexibility to allow the Group to take advantage of opportunities that could arise over the short term. The needs of the business are determined on a rolling cash flow forecast basis, covering weekly, monthly and twelve monthly requirements.  Short-term flexibility is maintained by holding cash in current accounts and high liquidity money market funds.  The Group has overdraft facilities in place both to permit currency borrowing as part of its foreign exchange management and to allow flexibility in where it holds its cash balances.

Recent events in the world financial markets have highlighted the risks associated with holding deposits in foreign domiciled banks.  The territories in which ITE operates do not all have internationally recognised banks and the Group has relationships with a number of domestic banks. The Group seeks to use the territories' leading banks and to minimise the level of cash held in such banks. Of the Group's total cash balance of £34.0 million as at 30 September 2011, 61% was held in institutions with a rating of grade A or above and 34% in B to BBB+.

 

Going concern

The Group and Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the CEO's statement and Operating Performance and Divisional Summary. The financial position of the Group and Company, its significant cash balance, its cash flow, liquidity position and absence of long term borrowings are described in the finance review. In addition, in the general information section and note 20 of the notes to the financial statements the Group and Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk are referred to.    

After making enquires, reviewing the Group and Company's forecasts and projections and taking account of reasonably possible changes in trading performance, the Directors have a reasonable expectation that the Group has adequate resources to continue its operations for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the Annual Report and Financial Statements.

Risks & Uncertainties

The Group identifies and monitors the key risks and uncertainties affecting the Group and runs the business in a way that minimises the impact of such risks where possible.

Operational risks	Potential impact	Mitigation
Political uncertainty and regulatory risk	The Group's business is principally carried out in Russia and the CIS.  Changes in law or the regulatory environment could have an effect on some or all of the exhibitions of the Group.	ITE has reduced the risk by establishing its business as independent Russian and CIS companies fully contributing to the local economy, and the diversity of businesses across sectors and geography provides protection for the longer-term prospects of the Group.
Economic instability reduces demand for exhibition space	Reduced demand for exhibition space would reduce the profits of exhibitions.	ITE operates across a wide range of sectors and countries to minimise the exposure to any single market . ITE, through its relationships with venues and staff has a relatively flexible cost structure, allowing it to manage its event margins in the short and medium term. This was clearly evidenced during the company's performance during the recent recession.
Commercial relationships	The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future.	These key relationships are regularly reviewed and the Group seeks to maintain its exhibition rights for at least three years forward for significant exhibitions where possible.
Venue availability	Damage to or unavailability of a particular venue could impact the Group's short-term trading position.	The Group carries business interruption insurance policies which protect profits on its largest 23 events against such an event in the short term. In the longer-term the Group seeks to maintain good relationships with its principal venues to ensure the continuance of availability.
Competitor risk	Competition has existed in ITE's markets for some years. ITE faces competitive pressures on a market-by-market basis.	In all of its overseas markets, ITE has a strong position as an international organiser, achieved through effective use of its international sales network and its established brands for major events.  A single exhibition or sector in a market could have its prospects curtailed by a strong competitor launch; however, the breadth of ITE's portfolio of events, with its geographic and sector diversity, reduce the risk of a competitive threat to the Group's overall business.
People	ITE's employees have long-standing relationships with customers and a unique knowledge of the exhibitions business.   Loss of key staff could impact the short-term prospects of a specific event or sector.	ITE has sought to build loyalty in its staff by ensuring remuneration is competitive and through a wide distribution of the Group's long-term incentive plans. ITE has a good record of retaining its key staff through both growth and recessionary times.
Financial risk - foreign currency risk	The Group is exposed to movements in foreign exchange rates against Sterling for both trading transactions and for the translation of overseas operations. The principal exposure is to the Euro, which forms the basis of invoicing and to the Ruble which forms the base books of the Group's Russian operations.	The Group seeks to minimise exposure by: ·   Protecting a certain amount of euro denominated sales with forward contracts.  ·   Utilising currency overdraft and term loan facilities to hedge foreign currency balance sheet assets.

		2011	2010
	Notes	£000	£000
Continuing operations
Revenue	4	155,456	113,547
Cost of sales		(80,595)	(58,211)
Gross profit		74,861	55,336
Other operating income		292	288
Administrative expenses before amortisation		(24,099)	(19,858)
Amortisation of acquired intangibles	3	(10,717)	(5,820)
Impairment loss		(130)	-
Foreign exchange (loss) on operating activities		(208)	(141)
Total administrative expenses		(35,154)	(25,819)
Share of results of associate		-	126
Operating profit		39,999	29,931
Gain on disposal of associate		-	834
Investment revenue	5	582	1,098
Finance costs	6	(1,487)	(585)
Profit on ordinary activities before taxation		39,094	31,278
Tax on profit on ordinary activities	7	(8,292)	(7,313)
Profit for the period		30,802	23,965
Attributable to:
Equity holders of the parent		30,724	23,873
Non controlling interests		78	92
		30,802	23,965
Earnings per share (p)
Basic	9	12.8	10.0
Diluted	9	12.6	9.8

		2011	2010*
	Notes	£000	£000
Profit for the period attributable to shareholders		30,802	23,965
Cash flow hedges:
Movement in fair value of cash flow hedges		(662)	2,548
Fair value of cash flow hedges released to the income statement		(1,367)	632
Currency translation movement on net investment in subsidiary undertakings		(4,162)	2,150
		24,611	29,295
Tax relating to components of comprehensive income	7	551	(414)
Total comprehensive income for the period		25,162	28,881
Attributable to:
Owners of the company		25,084	28,789
Non-controlling interests		78	92
		25,162	28,881

* The 2010 Consolidated Statement of Comprehensive Income has been restated to remove the line "Put option at fair value", which was included in error, the amount has now been taken directly to retained earnings. The 2010 total comprehensive income of £28,881,000 is £2,065,000 higher as a result and there is no change in the net assets of the Group at 30 September 2010.

	Share capital	Share premium account	Merger reserve	Capital Redemption reserve	ESOT reserve	Retained Earnings	Put Option reserve	Translation reserve	Hedge reserve	Total	Non Controlling interests	Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Balance as at  1 October 2010	2,483	2,698	2,746	457	(9,638)	68,318	(1,351)	4,310	1,435	71,458	1,123	72,581
Net profit for the year	-	-	-	-	-	30,724	-	-	-	30,724	78	30,802
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(4,162)	-	(4,162)	-	(4,162)
Movement  in fair value of cash flow hedges	-	-	-	-	-	-	-	-	(662)	(662)	-	(662)
Fair value of cash flow hedges released to the income statement	-	-	-	-	-	-	-	-	(1,367)	(1,367)	-	(1,367)
Tax relating to components of comprehensive income	-	-	-	-	-	551	-	-	-	551	-	551
Total comprehensive income for the period	-	-	-	-	-	31,275	-	(4,162)	(2,029)	25,084	78	25,162
Put option on acquisitions	-	-	-	-	-	-	(12,856)	-	-	(12,856)	6,554	(6,302)
Dividends paid	-	-	-	-	-	(14,105)	-	-	-	(14,105)	-	(14,105)
Exercise of share options	3	26	-	-	1,812	(106)	-	-	-	1,735	-	1,706
Share-based payments	-	-	-	-	-	1,696	-	-	-	1,696	-	1,696
Tax credited to equity	-	-	-	-	-	132	-	-	-	132	-	132
Exercise of put option on acquisition of subsidiary	-	-	-	-	-	(153)	862	-	-	709	(696)	13
Balance as at 30 September 2011	2,486	2,724	2,746	457	(7,826)	87,057	(13,345)	148	(594)	73,853	7,059	80,912

Consolidated Statement of Changes in Equity

For the year ended 30 September 2011

						Share capital	Share premium account		Merger reserve		Capital Redemption reserve	ESOT reserve	Retained Earnings	Put Option reserve	Translation reserve	Hedge reserve	Total	Non Controlling interests	Total Equity
						£000	£000		£000		£000	£000	£000	£000	£000	£000	£000	£000	£000
Balance as at  1 October 2009						2,481	2,678		2,746		457	(10,241)	60,519	(4,620)	2,160	(1,745)	54,435	2,272	56,707
Net profit for the year						-	-		-		-	-	23,873		-	-	23,873	92	23,965
Currency translation movement on net investment in subsidiary undertakings						-	-		-		-	-	-	-	2,150	-	2,150	-	2,150
Increase in fair value of cash flow hedges						-	-		-		-	-	-	-	-	1,079	1,079	-	1,079
Fair value of cash flow hedges released to the income statement						-	-		-		-	-	-	-	-	632	632	-	632
Effective portion of cash flow hedges on matured instruments						-	-		-		-	-	-	-	-	1,469	1,469	-	1,469
Tax relating to components of comprehensive income						-	-		-		-	-	(414)	-	-	-	(414)	-	(414)
Total comprehensive income for the period						-	-		-		-	-	23,459	-	2,150	3,180	28,789	92	28,881
Put option on acquisition of subsidiary						-	-		-		-	-	-	(2,065)	-	-	(2,065)		(2,065)
Dividends paid						-	-		-		-	-	(13,335)	-	-	-	(13,335)	-	(13,335)
Exercise of share options						2	20		-		-	603	(273)	-	-	-	352	-	352
Share-based payments						-	-		-		-	-	1,369	-	-	-	1,369	-	1,369
Tax credited to equity						-	-		-		-	-	341	-	-	-	341	-	341
Exercise of put option on acquisition of subsidiary						-	-		-		-	-	(3,762)	5,334	-	-	1,572	(1,241)	331
Balance as at 30 September 2010						2,483	2,698		2,746		457	(9,638)	68,318	(1,351)	4,310	1,435	71,458	1,123	72,581

* The 2010 Consolidated Statement of Comprehensive Income has been restated to remove the line "Put option at fair value", which was included in error,  the amount has now been taken directly to retained earnings. The 2010 total comprehensive income of £28,881,000 is £2,065,000 higher as a result and there is no change in the net assets of the Group at 30 September 2010.

Consolidated Statement of Financial Position 30 September 2011		2011	2010
		£000	£000
Non-current assets
Goodwill		70,684	50,584
Other intangible assets		58,867	28,829
Investments		400	-
Property, plant and equipment		2,080	1,741
Interests in associates		100	-
Venue advances and other loans		4,043	6,178
Derivative financial instruments		79	178
Deferred tax asset		2,112	1,652
		138,365	89,162
Current assets
Trade and other receivables		51,623	38,488
Tax prepayment		923	608
Derivative financial instruments		221	951
Cash and cash equivalents		33,961	33,163
		86,728	73,210
Total assets		225,093	162,372
Current liabilities
Bank overdraft		(13,948)	(10,183)
Trade and other payables		(19,766)	(15,163)
Deferred income		(67,867)	(55,211)
Derivative financial instruments		(906)	(161)
Provisions		(565)	(452)
		(103,052)	(81,170)
Non-current liabilities
Bank loan		(14,483)	-
Provisions		(866)	(807)
Deferred tax liabilities		(13,067)	(6,089)
Derivative financial instruments		(12,713)	(1,725)
		(41,129)	(8,621)
Total liabilities		(144,181)	(89,791)
Net assets		80,912	72,581
Equity
Share capital		2,486	2,483
Share premium account		2,724	2,698
Merger reserve		2,746	2,746
Capital redemption reserve		457	457
ESOT reserve		(7,826)	(9,638)
Retained earnings		87,057	68,318
Translation reserve		148	4,310
Hedge reserve		(594)	1,435
Put option reserve		(13,345)	(1,351)
Equity attributable to equity holders of the parent		73,853	71,458
Non controlling interests		7,059	1,123
Total equity		80,912	72,581

The financial statements of ITE Group plc, registered company number 01927339, were approved by the Board of Directors and authorised for issue on 28 November 2011.  They were signed on their behalf by:

Russell Taylor                                   Neil Jones           
Chief Executive Officer                   Finance Director

Consolidated Cash Flow Statement as at 30 September 2011

		2011	2010*
		£000	£000
Cash flows from operating activities
Operating profit from continuing operations		39,999	29,931
Adjustments for non cash items:
Depreciation and amortisation		11,647	6,682
Impairment of asset		130	-
Share-based payments		1,696	1,369
Share of associate profit		-	(126)
Increase in provisions		172	446
Disposal of plant, property and equipment		35	-
Foreign exchange loss on operating activities		208	141
Barter sales		(501)	(300)
Operating cash flows before movements in working capital		53,386	38,143
Increase in receivables		(10,589)	(2,171)
Utilisation of venue loans		7,330	3,681
Increase in deferred income		12,656	10,644
Increase/(decrease) in payables		3,364	(3,112)
Fair value of cash flow hedges released to the income statement		(1,367)	632
Cash received on settlement of forward contracts		546	1,863
Cash generated from operations		65,326	49,680
Tax paid		(11,589)	(7,427)
Venue advances and loans		(6,923)	(9,248)
Net cash from operating activities		46,814	33,005
Investing activities
Interest received		449	342
(Loss)/ gain on derivative financial instruments		(18)	214
Dividends received from associates		-	637
Acquisition of businesses - cash paid		(47,565)	(17,498)
Show profits retained by vendor on acquisition of Krasnodar Expo		(2,010)	-
Cash acquired through acquisitions		3,032	1,915
Purchase of plant, property & equipment and computer software		(1,523)	(1,106)
Net cash utilised from investing activities		(47,635)	(15,496)
Financing activities
Cash paid to acquire non controlling interests		(763)	(3,000)
Dividends paid		(14,105)	(13,335)
Interest paid		(1,082)	(576)
Proceeds from the issue of share capital		3	22
Net cash flows from financing activities		(15,947)	(16,889)

		2011	2010*
		£000	£000
Net (decrease)/ increase in cash and cash equivalents		(16,768)	620
Net cash and cash equivalents at beginning of period net of overdrafts		22,980	23,107
Effect of foreign exhange rates		(682)	(747)
Net cash and cash equivalents at end of period net of debt		5,530	22,980

Comprising:
Cash and cash equivalents		33,961	33,163
Bank overdraft		(13,948)	(10,183)
Bank Loan		(14,483)	-
		5,530	22,980
Cash generated from the business
Cash generated from operations		65,326	49,680
Interest received		449	342
Interest paid		(1,082)	(576)
Dividends earned from associates		-	637
		64,693	50,083
Free cash flow from the business
Cash generated from the business		64,693	50,083
Tax paid		(11,589)	(7,427)
		53,104	42,656

*The Consolidated Cash Flow Statement as at 30 September 2010 has been restated to separate out the following captions; foreign exchange, barter sales, utilisation of venue loans and advances, fair value of cash flow hedges released to the income statement and cash received on settlement of forward contracts for greater clarity.

1 Basis of preparation

 Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS"), this announcement does not contain sufficient information to comply with IFRS's.

The Company expects to publish full financial statements that comply with IFRS in December 2011. These will be available at www.ite-exhibitions.com.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2011 or 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

2 Impact of new accounting standards

New, revised or changes to existing standards which have been adopted by the Group in the year ending 30 September 2011

The following new standards and interpretations have been adopted in the current year but have not impacted the reported results or the financial position:

§ Amendment to IAS 32 "Classification of Rights Issue"

§ Amendments to IFRS 1 "First-time Adoption of International Financial Reporting Standards"

§ Amendment to IFRS 2 "Group Cash-settled Share-based Payment Transactions"

§ IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments"

§ Improvements to IFRSs - 2010 and 2009

New standards and interpretations not yet adopted

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):

§ Amendments to IFRS 7, "Financial Instruments: Disclosure"

§ IFRS 9 "Financial Instruments - Classification and Measurement"

§ IFRS 10 "Consolidated Financial Statements"

§ IFRS 11 "Joint Arrangements"

§ IFRS 11 "Disclosure of Interests in Other Entities"

§ IFRS 13 "Fair Value Measurement"

§ Amendments to IAS 1 "Presentation of financial statements"

§ Amendments to IAS 19 "Employee Benefits"

§ Amendment to IAS 24, "Related Party Disclosures"

§ Reissue of amended IAS 27 "Consolidated and Separate Financial Statements" as IAS 27 "Separate Financial Statements"

§ Reissue of amended IAS 28 "Investments in Associates" as IAS 28 "Investments in Associates and Joint Ventures"

§ Amendment to IFRIC 14, "Prepayments on a Minimum Funding Requirement"

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, except for:

§ IFRS 9 "Financial Instruments" - This will introduce a number of changes in the presentation of financial instruments.

§ The amendment to IAS 1 "Presentation of financial statements" will change the presentation of the Statement of comprehensive income.

§ IFRS 10 - 13 were issued by the IASB on 12 May 2011 and which are effective for annual periods beginning on or after 1 January 2013. These pronouncements have not yet been endorsed for use in the EU. The Group has not completed its assessment of the impact of pronouncements on the consolidated results, financial position or cash flows of the Group.

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

	2011	2010
	£000	£000
Profit on ordinary activities before taxation	39,094	31,278
Amortisation of acquired intangibles	10,717	5,820
Loss on exercise of Ekin Fuar put option	269	-
Gain on settlement of contingent consideration	(119)	-
Loss on settlement of contingent consideration	104	-
Gain on exercise of Primexpo North West LLC put option	-	(533)
Gain on disposal of associate	-	(834)
Transaction costs (completed and pending)	1,180	860
Impairment of goodwill	130	-
Headline pre-tax profit	51,375	36,591

Profit on ordinary activities before taxation is stated after charging/(crediting):	2011	2010
	£000	£000
Staff costs	29,115	22,971
Depreciation of property, plant and equipment	633	661
Amortisation of computer software	297	201
Amortisation of purchased intangible assets	10,717	5,820
Impairment of goodwill	130	-
Operating lease rentals - other	3,623	3,036
Loss/(gain) on derivative financial instruments - cash flow hedges (notes 5 and 6)	18	(214)
Loss/ (gain) on derivative financial instruments - put options (notes 5 and 6)	269	(533)
Foreign exchange loss on operating activities	208	141

4 Segmental information

IFRS 8 introduces the term Chief Operating Decision Maker (CODM). The Senior Management Board comprising the Executive Directors  (Russell Taylor (Chief Executive Officer), Neil Jones (Financial Director), Edward Strachan (Executive Director)), Stephen Keen, Alexander Shtalenkov, Andy Braid, Colette Tebbutt and Suzanne King is considered to be the CODM. ITE's reportable segments are strategic business units that are based in different geographic locations, predominantly in the developing and emerging markets.  Each business unit is managed separately and has a different marketing strategy as determined by the local management. The products and services offered by each business unit are identical across the group.  ITE Group evaluates performance on the basis of profit or loss from operations before tax expense not including non-recurring gains and losses and foreign exchange gains and losses. The revenue and profit before taxation are attributable to the Group's one principal activity, the organisation of trade exhibitions, conferences and related activities and can be analysed by geographic segment as follows.

Year ended 30 September 2011	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/ activities
Revenue	8,950	21,853	105,650	17,940	1,063	155,456
Result	(17,975)	7,852	47,320	4,042	(1,240)	39,999
By origin of sale
Revenue	56,841	10,998	71,594	15,981	42	155,456
Result	12,919	3,562	25,831	(1,324)	(989)	39,999
Operating profit						39,999
Investment revenue						582
Finance costs						(1,487)
Profit before tax						39,094
Tax						(8,292)
Profit after tax						30,802
Capital expenditure	456	117	680	21	-	1,274
Depreciation and amortisation	586	176	6,612	4,002	271	11,647
Balance Sheet
Assets*	66,006	13,061	99,078	41,138	2,774	222,057
Liabilities*	(48,360)	(5,718)	(51,786)	(20,804)	(1,603)	(128,271)
Non Current Assets**	20,715	8,022	65,630	35,635	2,129	132,131

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

**Included in non current assets are all non current assets other than venue advances and other loans, deferred tax assets and financial instruments.

The revenue in the year of £155.5 million includes £0.5 million (2010: £0.3 million) of barter sales.

Related Notes
For the year ended 30 September 2011

Year ended 30 September 2010	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	8,188	19,622	66,130	15,271	4,336	113,547
Result  (excluding share of results of associates)	(13,185)	8,074	30,046	3,978	892	29,805
By origin of sale
Revenue	48,796	9,179	40,108	13,208	2,256	113,547
Result (excluding share of results of associates)	12,319	2,599	13,768	1,320	(201)	29,805
Share of results of associates						126
Operating profit						29,931
Gain on disposal of associate						834
Investment revenue						1,098
Finance costs						(585)
Profit before tax						31,278
Tax						(7,313)
Profit after tax						23,965
Capital expenditure	438	308	188	92	80	1,106
Depreciation and amortisation	1,251	187	3,172	1,797	275	6,682
Balance Sheet
Assets*	55,611	10,700	57,043	33,314	3,444	160,112
Liabilities*	(41,635)	(4,483)	(25,731)	(6,967)	(901)	(79,717)
Non Current Assets	16,521	7,807	33,599	19,871	3,356	81,154

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

**Included in non current assets are all non current assets other than venue advances and other loans, deferred tax assets and financial instruments.

5 Investment revenue
	2011	2010
	£000	£000
Interest receivable from bank deposits	437	271
Interest receivable from Inland Revenue repayments	12	71
Gain on derivative financial instruments	14	223
Gain on settlement of contingent consideration	119	-
Gain on exercise of Primexpo North West LLC put option	-	533
	582	1,098

6 Finance costs
	2011	2010
	£000	£000
Interest on overdrafts	741	208
Bank charges	341	336
Loss on exercise of Ekin Fuar put option	269	-
Loss on settlement of contingent consideration	104	-
Interest payable to Inland Revenue	-	32
Loss on derivative financial instruments	32	9
	1,487	585

7 Tax on profit on ordinary activities

Analysis of tax charge for the year:

	2011	2010
	£000	£000
Group taxation on current year profit
UK corporation tax on profit for the year	3,294	4,021
Adjustment to UK tax in respect of previous years	(768)	(460)
	2,526	3,561
Overseas taxation - current year	8,569	5,830
Overseas taxation - previous years	(442)	76
	8,127	5,906
Current tax	10,653	9,467
Deferred tax
Origination and reversal of timing differences:
Current year	(2,362)	(1,525)
Prior year	1	(629)
	8,292	7,313

The tax charge for the year can be reconciled to the profit per the income statement as follows:
	2011	2010
	£000	£000
Profit on ordinary activities before tax	39,094	31,278
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 27% (2010: 28%)	10,555	8,758
Effects of:
Expenses not deductible for tax purposes	963	152
Deferred tax assets not recognised	39	29
Withholding tax and other irrecoverable taxes	333	776
Adjustments to tax charge in respect of previous years	(1,210)	(1,013)
Deferred tax provision in respect of proposed dividends from overseas subsidiaries	13	103
Effect of different tax rates of subsidiaries operating in other jurisdictions	(2,401)	(1,457)
Associate tax	-	(35)
	8,292	7,313

	2011	2010
	£000	£000
Tax relating to components of comprehensive income;
Cash flow gains/(losses)  - Current	225	(256)
Cash flow gains/ (losses) - Deferred	326	(158)
	551	(414)
Tax relating to amounts credited to equity;
Share options -Current	127	119
Share options - Deferred	5	222
	132	341
	683	(73)
8 Dividends

	2011	2010
	£000	£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2010 of 4.0p (2009 - 3.9p) per ordinary share	9,537	9,283
Interim dividend for the year ended 30 September 2011 of 1.9p (2010 -1.7p) per ordinary share	4,568	4,052
	14,105	13,335
Proposed final dividend for the year ended 30 September 2011 of 4.2p (2010 - 4.0p) per ordinary share	10,100	9,533

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

Under the terms of the trust deed dated 20 October 1998, the ITE Group Employees Share Trust, which holds 8,102,687 (2010: 9,978,386) ordinary shares representing 3.3% of the Company's called up ordinary share capital, has agreed to waive all dividends due to it each year.

9 Earnings per share

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

	2011	2010
	No.of shares (000)	No.of shares (000)
Weighted average number of shares:
For basic earnings per share	239,635	238,679
Effect of dilutive potential ordinary shares	5,132	4,213
For diluted and headline diluted earnings per share	244,767	242,892

Basic and diluted earnings per share

The calculations of basic and diluted earnings per share are based on the profit for the financial year attributable to equity holders of the parent of £30.7 million (2010: £23.9 million). Basic and diluted earnings per share were 12.8p and 12.6p respectively (2010: 10.0p and 9.8p respectively).

Headline diluted earnings per share

Headline diluted earnings per share is intended to provide a consistent measure of Group earnings on a year-on-year basis and is 16.6 per share (2010: 11.6p).  Headline basic earnings per share is 17.0 per share (2010: 11.8p).

	2011	2010
	£000	£000
Profit for the financial year attributable to equity holders of the parent	30,724	23,873
Amortisation of acquired intangible assets	10,717	5,820
Tax effect of amortisation of acquired intangible assets	(2,358)	(1,144)
Transaction costs	1,180	860
Loss on exercise of Ekin Fuar put option	269	-
Loss on settlement of contingent consideration	104	-
Gain on settlement of contingent consideration	(119)	-
Tax effect of other adjustments	(27)	-
Gain on exercise of Primexpo North West LLC put option	-	(533)
Gain on disposal of associate	-	(834)
Impairment of goodwill	130	-
Headline earnings for the financial year after taxation	40,620	28,042

Responsibility statement

The responsibility statement below has been prepared in connection with the Group's full annual report for the year ending 30 September 2011. Certain parts thereof are not included within this announcement.

We confirm that to the best of our knowledge:

The accounts prepared in accordance with International Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and the management report, which is incorporated in the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face

The responsibility statement was approved by the board of directors on 28 November 2011 and is signed on its behalf by:

Russell Taylor                                                                             

Group Chief Executive

Neil Jones

Chief Financial Officer

Financial Calendar

Final dividend 2011

Ex dividend date                              4 January 2012

Record date                                        6 January 2012

Annual General Meeting               26 January 2012

Payment date                                    13 February 2012

Interim dividend 2012

Ex dividend date                             4 July 2012

Record date                                       6 July 2012

Payment date                                    9 August 2012

 

END

 

 

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