Preliminary Results Announcement

RNS Number : 4737H

ITE Group PLC

01 December 2015

 

 1 December 2015

ITE GROUP PLC

PRELIMINARY RESULTS ANNOUNCEMENT

Results in line with expectations

Financial highlights

	Year to 30 September 2015	Year to 30 September 2014
Revenue	£135.8m	£174.8m
Headline pre-tax profit *	£47.2m	£60.3m
Headline diluted earnings per share **	15.3p	20.2p
Profit before tax	£31.5m	£41.5m
Diluted earnings per share	10.4p	13.8p
Dividend per share	7.4p	7.4p
Net (debt)	£(52.3)m	£(14.8)m

·      Results in line with Board's expectations despite difficult market conditions

·      Further diversification achieved: Breakbulk, Eurasia Rail & Africa Oil Week acquisitions

·      Good performance from Asia, Turkey and India

·      Net debt of £52.3 million after investing £56 million on acquisitions & deferred consideration

·      Post period end, acquired majority stake in leading Indian organiser ABEC for £14 million

·      Maintained full year dividend at 7.4p, reflecting confidence in future

·      £77 million of revenues booked for 2016

Russell Taylor, CEO of ITE Group plc, commented:

"ITE has delivered a solid performance despite a challenging trading environment in Russia and more recently in the central Asian states due to the weakness of the oil price and domestic currency, which has impacted the Group's results. The Group's other regions, which now account for over 40% of ITE's business, are trading well.  

"ITE has continued to diversify its portfolio and strengthen its industry verticals by acquiring leading events, establishing a better geographic balance between its historical Russian-CIS businesses and other leading emerging markets. ITE has established cornerstone businesses in three of the largest emerging markets of the future - China, India and Africa. The Group operates a resilient business model, a flexible cost base and our strong market positions mean the Group is well placed to benefit from any future improvement in the Russian economy."

*     Headline pre-tax profit is defined as profit on ordinary activities before taxation, amortisation of acquired intangible assets, impairment of goodwill, profits or losses arising on disposal of Group undertakings, transaction costs on completed and pending acquisitions & disposals, tax on income from associates & joint ventures, gains or losses on the revaluation of contingent consideration, gains or losses on the revaluation  of put option liabilities over non-controlling interests, and imputed interest charges on discounted put option liabilities - see note 3 for details.

**   Headline diluted earnings per share is calculated using profit attributable to equity holders of the parent before amortisation of acquired intangible assets, impairment of goodwill, profits or losses arising on disposal of Group undertakings, transaction costs on completed and pending acquisitions & disposals, gains or losses on the revaluation of contingent consideration, gains or losses on the revaluation  of put option liabilities over non-controlling interests, and imputed interest charges on discounted put option liabilities - see note 9 for details.

Enquiries:

Russell Taylor, Chief Executive Neil Jones, Chief Financial Officer Des McEwan, Group Financial Controller	ITE Group plc	020 7596 5000
Charles Palmer/ Emma Appleton	FTI Consulting	020 3727 1000

Chairman's Statement

Group Performance

ITE Group plc has reported revenues of £136 million and headline profits before tax of £47 million. The two major themes running through this year have been the impact of the fall in the oil price on the oil dependant economies where we operate, and the Group's ongoing diversification of its business. The lower oil price has caused a significant slowdown in economic activity in some of the key countries in which we operate and has also led to a devaluation of their currencies against Sterling. At the same time, the Group has continued to diversify both organically and through acquisition into other geographies. During 2015, three substantial acquisitions have been completed and, as a result, the Group has stronger businesses in Asia and Turkey and has established a first time presence in Africa, a new geography for ITE. These proactive changes have given the Group a better geographic balance between its historic Russian-CIS businesses, and other leading emerging markets. Looking forward, Russia now accounts for circa 40% of ITE's business (2014: 51%).

The Group has made significant progress during the year in developing its business by adding to its portfolio of market-leading events in target industry sectors. Over the course of the year the transport and logistics portfolio has been enhanced by the additions of Eurasia Rail in Turkey and the international Breakbulk series of events. In the oil and gas portfolio the Group acquired Africa Oil Week which serves the upstream industry and is the leading event for exploration of future oil and gas reserves in Africa. Post-year end the Group has announced the exercise of its call option in its Indian associate, ABEC, taking its holding to 60%, making ITE the leading private organiser in the Indian exhibition industry as well as enhancing its construction portfolio.

Overall, these results demonstrate the resilience of the Group's business model to challenging trading circumstances in some of its most important geographies and its continued focus on the execution of its strategy.

In this stronger biennial year, headline diluted earnings per share was 15.3p (2014: 20.2p). Reported pre-tax profit was £31.5 million (2014: £41.5 million) and fully diluted earnings per share was 10.4p (2014: 13.8p). The Group finished the year with net debt of £52 million (2014: £15 million), after investing £56 million on acquisitions during the year.

Board and Management

There were no changes to the Board during the financial year. However on 14 October 2015, Neil Jones, our Chief Financial Officer for the last seven years announced that he will be leaving the Group.  Neil will remain at ITE until 31 January 2016 in order to close the current financial year end, and to ensure a smooth handover. The Board has commenced a search for his successor and a further announcement in relation to a new Chief Financial Officer will be made in due course.  On behalf of the Board, I would like to thank Neil for his contribution over the last few years; his knowledge, drive and positive attitude have made him an excellent member of the executive management team and we wish him well in his future endeavours.

ITE is a people business and its success is based upon the hard work and loyalty of its staff worldwide. The Group has over 1,000 employees conducting its business in 32 offices in 20 different countries. We have an increasingly diverse mix of cultures with an additional 250 staff in Asia employed via associate business structures. Almost 50% of our staff have been employees of ITE for more than five years and 63% are participants in one of our equity schemes. As Chairman and on behalf of the Board, I would like to thank and acknowledge the contribution of all of ITE's employees to this year's result and especially those staff in Ukraine and Russia who have worked extremely hard under difficult circumstances. 

ITE's Board recognises that good corporate governance is in the long-term interests of the Group and we are conscious of our responsibilities for setting values that underpin the Group culture. As Chairman, I am mindful of my personal responsibility for leading the Board and ensuring it operates diligently and effectively. 

Dividend

This year the interim dividend was held at 2.5p and the proposed final dividend remains at 4.9p, making a full dividend for the year of 7.4p (2014: 7.4p). This reflects the Board's confidence in the quality and potential of the business. The final dividend is proposed for payment on 8 February 2016 to shareholders on the register on 8 January 2016.

Outlook

Trading conditions in Russia and more recently the central Asian states, continue to be challenging. Whilst the Group has seen a stabilisation in Russian trading conditions, the impact of lower oil prices and domestic currency weakness is reflected in our forward bookings. As anticipated, the H1 bookings for 2016 will be more impacted than H2, as last year's comparatives for H1 only partially reflect the current trading conditions in Russia and Central Asia. The Group's other regions, which now account for over 40% of ITE's business are trading well. At 27 November 2015, Group revenues already booked for FY 2016 were £77 million representing circa 57% of market expectations for the full year. On a like-for-like basis these revenues are circa 10% behind this time last year. 

Although ITE's ongoing geographical diversification is reducing its dependency on Russia, the Group's results remain sensitive to its economic climate and to the oil price. However, its strong market positions mean the Group is well positioned to benefit from any future improvement in the Russian economy. Elsewhere, ITE has good growth prospects in its other markets and its portfolio of leading events continue to perform well. Management will continue to monitor and review the Group's cost base to ensure that it has the most efficient structure and will further diversify the Group's business as well as strengthen its industry verticals. The Group has a robust balance sheet, good operating cash flow and the Board has confidence in the Group's future prospects.

Marco Sodi

Chairman

Where used, like-for-like measures are stated on a constant currency basis adjusted to exclude acquisitions impacting for the first time, event timing differences and biennial events.

Chief Executive's Statement

The Group's performance this year

ITE's performance this year largely reflects the difficult trading conditions in its main market, Russia and the decline in the value of the Russian Ruble (against Sterling) in which 40% of the Group's revenues are denominated.

The main factors affecting Group profitability this year are summarised in the profit bridge below. 

	£'m
2014 headline PBT	60.3
Net biennial & timing	1.4
Net 'once off' forex	1.9
FX impact FY15	(6.5)
Acquisitions (net of overheads and financing)	2.6
Core business	(12.5)
2015 headline PBT	47.2

The fall by circa 50% of the Russian Ruble against Sterling accounted for most of the £6.5 million foreign exchange loss suffered in the year, and a reduction in core business through adverse economic conditions accounted for a further £12.5 million of shortfall against last year. Offsetting this was a positive biennial contribution of £1.4 million, and the benefit of newly acquired businesses, which had an incremental effect of £2.6 million in the year after additional financing costs.

The currency impact and the core business decline have a common cause; the fall in the oil price having a negative effect on the oil dependant economies of Russia, Azerbaijan and Kazakhstan and leading to a proportionate devaluation of currencies to protect their national finances. The currencies of Russia, Azerbaijan and Kazakhstan are now trading at circa half of their previous values against Sterling. The effect on ITE's business in these countries was further aggravated by the high proportion of ITE's exhibitors who import and distribute overseas goods, for these customers the currency devaluation has made their business less competitive.

The Group's Russian and Ukrainian businesses were the most severely impacted in the year. The ongoing political instability in Eastern Ukraine and consequent sanctions imposed by the West on Russia was already dragging on the Russian business before the sudden fall in oil prices in December 2014. Overall, like-for-like trading volumes across Russia declined by 20% in the year, which accounts for the majority of the £12.5 million decline in core business highlighted above. The Ukrainian office had already suffered a 50% decline in business activity last year, and this year reported a further 25% reduction in like-for-like volumes, as the first half of the year reported 'catch up' results reflecting the political turmoil that had already impacted the second half of the previous financial year. The Central Asian business had traded positively last year, and started this year in positive mode with the early events showing good growth, but by the end of the year these economies were also reflecting the impact of a much lower oil price, and had devalued their currencies.

The associate businesses in India and China made a positive contribution to the core business, with the 50% owned Sinostar business in China, and the 28% owned ABEC business in India both reporting 'best ever' results (though revenues of those businesses are not consolidated). The positive contribution of £2.6 million from newly acquired businesses came from the additions of Eurasia Rail, and the Breakbulk portfolio, both of which are set out in more detail below.

Development of the business

The main objectives for the Group this year were continuing to expand and diversify the Group's business and managing the effects of the difficult economic conditions in Russia.

The Group made three substantial acquisitions in the year. In December 2014 the Group acquired the Breakbulk portfolio of events for £27 million. In January this year, the Group acquired Eurasia Rail for £7.3 million.  In March this year, the Group acquired 50% of Africa Oil Week for £16 million, which was largely funded by a share placing raising approximately £12 million. These events will further diversify our business away from its historical Russia-CIS platform and their contributions will be fully reflected in next year's results. 

The Breakbulk portfolio of exhibitions and publications serves the transportation and logistics market for large scale project equipment, and are held annually in Houston, Antwerp, Shanghai, and Johannesburg. The Shanghai, Antwerp and Johannesburg events ran in this financial year. The Houston event and a newly launched Middle East event took place in October 2015 and will be included in the Group's 2016 results. The portfolio provides exciting opportunities for the Group and is performing in line with expectations.

Eurasia Rail is the leading railway infrastructure show in Turkey and extends our Transport & Logistics industry sector into Rail transportation and geographically into Turkey. It ran for the first time under ITE ownership in March 2015 and performed in line with our expectations.

Africa Oil Week is the annual Oil & Gas confex held in Cape Town. It is the longest-running and most prominent event held in Africa for the continent's growing oil, gas and energy industry. Delegate attendance and financial performance held up well and the event remains resilient. We expect it to recover and exceed its previous levels when oil prices return to more normal levels.

The Group's management has invested heavily in managing its exposure to the Russian economy, by reviewing and controlling its cost base. Over the year the total headcount in Russia has been reduced by circa 11% from 444 to 393, as we have sought to keep costs in line with reducing volumes of business. Venue costs are the biggest part of our cost base, and these have been reduced in line with business volumes. There have been positive developments in the Krasnodar business, where a new venue has been completed which will help ITE's business to grow in future years. Krasnodar is the prime agricultural region in Russia and is benefitting from the current focus for Russia to become less dependent on imports for its food production. We have also continued to build our joint venture relationship with Messe Frankfurt to develop a world class exhibition in the Russian auto sector. This joint venture already runs the MIMS - Automechanika event and we have jointly invested a further £3.2 million to acquire Comtrans, the commercial vehicle exhibition taking place in Moscow.

The Asian business has had a year of building structure and consolidation, following the acquisition activity of earlier years. We now have a well-established management structure with a clear focus on how to build a coherent exhibition portfolio in the future. A good proportion of time this year has been spent preparing ourselves for the exercise of the call option over ABEC in India, and establishing how to properly combine the activities of our two business units. ABEC itself has had a very strong year growing its profits by 40%, and we are pleased Manish and Sumit Gandhi will continue to work for ITE and ABEC in the future.

The Group continues to develop its digital capacity, with the creation of a team spread across the regions allowing the Group to utilise its best resources in this area and access maximum synergies. The team focuses on the use of existing data, in particular on enhanced data governance, collection and collation as well as best practice in digital engagement with our customers. Central to this is our ability to monitor our customers' feedback and measurement of their satisfaction and experience at the Group's events. The team is also challenged to deliver complimentary revenues streams and the Group's first digital product: WorldBuild365, was launched in July. This creates an online extension of the exhibition for the construction industry by bringing buyers and sellers of the industry together throughout the year on a digital platform where they can share product information and industry knowledge.

Venue expansion is critical to the development of our business. As noted before, the new purpose-built venue in Krasnodar offering 28,000 m² of international standard space is an improvement on the old facility, which has restricted the growth of some of our biggest events. A new 50,000 m² venue in Jakarta, Indonesia, which is opening in early 2016 will facilitate growth of our market-leading construction event, Indobuildtech. In Malaysia construction is underway on a new venue of circa 20,000 m² due to open in 2017 that will create opportunities for the Group to grow its events. The Group is increasingly well positioned to participate in the growth that the investments in local exhibition facilities will generate.

ITE's diversification strategy is continuing to work well and it remains a priority to create more geographical balance in our business. ITE has now established 'cornerstone' businesses in three of the largest emerging markets of the future - China, India and Africa. Having established a base business in these geographies much of the Group's future activity will focus on developing additional scale through organic development and bolt-on acquisitions in our core industries. The historic development of our business has left us with strong industry positions in Construction, Oil and Gas, Travel & Tourism and Food, with multiple shows in each sector. We have this year created a stronger position in the Transport and Logistics sector, which we expect to be a good opportunity in our new emerging market geographies in the future. We are increasingly seeing more synergy across the industry portfolios, and the expected contribution from acquisitions made in this financial year will fall half into the Oil and Gas portfolio, with the remaining half into the Transport and Logistics sector.

ITE's objectives and strategy

ITE's principal objective is to create a business with sustainable growth in headline earnings per share. Its strategy is to develop positions of market leadership in the exhibition business substantially in emerging and developing markets with good growth prospects.

ITE has been evolving its strategic objectives. We have to date been successful in establishing positions in new markets, but in the future our activity will be orientated towards development of brands and industry verticals to support our aim for industry leadership in certain sectors. This 'strength in depth' logic is increasingly driving the development of our future business as it both reduces risk and increases synergy to develop the business within sectors where there is expertise and a common customer base. We will continue to add geographic balance to our business through expansion in our industry verticals in focussing on emerging and developing markets.

Four priorities underpin ITE's strategy:

1.  Improving its existing positions of market leadership

2.  Expansion into new sectors and geographies with potential for strong market positions

3.  Improving our exhibition brands

4.  Developing our people

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

(i)            Improving existing positions of market leadership:

ITE's existing positions of market leadership are founded on its ability to generate international sales, its recognised brands, its local office infrastructure and its longstanding relationships with venues.

International sales strength 

ITE's ability to generate international sales has differentiated it from its local competition in Russia and the related CIS markets. The same pattern is also true of China and South East Asia, with international participation and content being key differentiators for pricing and position. The Group has established a loyal customer base and a geographic reach, which is increasingly valuable as it seeks to leverage its sales into new markets. This year the Group has focussed on growing its sales from Asia, and now operates 'outbound' offices in India, and Malaysia in addition to its Beijing office. In 2015 the Group's international sales offices sold 105,000m² which represents circa 25% of the Group's 2015 revenues. Approximately 14% of revenues were sold by the Group's London office, 3% by the German office, 4% by the Turkish office and 6% by the sales offices in Asia. 

ITE's international brands

ITE has established strong brand identities in certain exhibition sectors. In particular, the WorldBuild brand in construction, the Global Oil & Gas brand, the ITE Travel portfolio and the WorldFood brands all have strong reputations with customers as leading events in the Russian and CIS markets earned through more than fifteen years of sustained good performance. We have this year developed these 'brands' in an online environment, and developed a clear new brand in the 'Translogistica' space.

Local office infrastructure

ITE's brands have built their reputation through sustained delivery of successful exhibitions to customers.  The foundation of this is in ITE's local offices which now employ over 900 staff. Local offices generate the local sales, reputation and visitor participation of the event as well as managing technical staging of the exhibitions. Critically they own and develop the database of local visitors who make the exhibition successful for the exhibitors. In its core markets, ITE's local offices have always been a competitive advantage over other international exhibition organisers and a barrier to entry for new organisers wishing to run events. ITE will continue to develop strong local offices as part of its exhibition business in new markets. The Group has an integration programme for new offices acquired into the ITE network and is increasing its investment in the infrastructure that underpins these offices and in staff training. The Group has high rates of employee retention in its offices, and supports this by its commitment to having widespread equity ownership - currently 63% of staff participate in some form of equity scheme.  

Venue relationships

ITE has always enjoyed long-standing relationships with the venues that host its exhibitions. In its historic core markets ITE has supported the development of venue facilities which in turn has helped the Group's exhibitions to grow. The Group has always sought to establish rights to run its main exhibition themes in its partner venues at the time of its choice and ITE has continued to work on maintaining and improving the venue relationships that underpin its business. Most of ITE's major events have agreements which provide for venue facilities for two to three years ahead.  

 (ii)          Expansion into new sectors and geographies with potential for strong market positions:

In existing markets this strategy means targeting new sectors in which to acquire or develop exhibitions 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. 

This year the Group has continued to expand its business presence into Turkey, South East Asia, China and Africa. In so doing it has acquired expertise in new sectors - some of which have the potential to be replicated in ITE's core markets. It has also made it possible for the Group to run its existing brands in the new markets. The acquisition of Africa Oil Week, which serves the oil industry throughout Africa, provides ITE with a platform to run other events in select African countries. We have already announced the launch of a construction event in Nigeria in tandem with a partner, and we plan to expand the oil and gas franchise further where practical. In India, the step up to ABEC becoming a subsidiary is significant for the future development of our business in India.

As the Group's acquisition activity over the last few years has opened up access to new markets, there are now increasing synergies and benefits to be gained from strengthening its industry portfolio where it has sector presence. The Group aims to increasingly focus its acquisition activity on building portfolio strength and leadership in exhibition sectors - creating stronger, more defensible business positioning for its exhibitions.

 (iii)        Improving our exhibition brands:

The Group's management has been working to strengthen ITE's existing international brands. We are doing this by introducing product improvements to enhance customer experience and ensuring consistency in the presentation and promotion of similar events in ITE's vertical industry sectors. The Group's brand development projects have covered all aspects of product quality, naming, character, tone-of-voice and graphic designs associated with events in the Group's largest portfolios. The improvements will deliver numerous benefits, including increasing the global recognition of ITE's brands and enabling the Group to launch events into new territories.  

(iv)          Developing our people:

The Group has continued its programme of developing the strength and depth of the leadership and management teams in the year as well as improving communications between offices. Current initiatives include a continuing commitment to our leadership development programme focusing on the Group's most promising employees. We also continue to invest in a rolling programme of cross-Group development conferences. Communications have continued to improve, with a high level of employee engagement via the intranet, the newsletter and through cooperation in cross border industry groups.  

ITE has continued to evolve the strategic priorities by which it seeks to achieve its overall objectives. The Group has been successful in establishing positions in new markets and in the year ahead will continue to focus on strengthening its brands and industry verticals.  

Russell Taylor

Chief Executive Officer

Divisional trading summary 2015

Overall in 2015 the Group ran 240 events (2014: 246). The decrease in the number of events is attributable to a combination of acquisition activity, launches and timing differences. 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
2014	All events		733		175		81
	Non-annual		(70)		(11)		(3)
	Timing		(15)		(3)		(1)
2014	Annually recurring		648		161		77		248
	Acquisitions		20		6		4
	FX Translation		-		(22)		(10)
	Net Growth		(96)		(20)		(14)
2015	Annually recurring		572		125		57		219
	Non-annual		20		7		4
	Timing		21		4		1
2015	All events		613		136		62

Overall, the Group saw volume sales fall by 16% to 613,400m² and revenues decrease by 22% to £135.8 million, despite a stronger biennial year and the impact of acquisitions. On a like-for-like basis, volume sales fell by 14% and revenues fell by 12%.

Revenue

					2015	2014			%		%
					£m	£m			change		change Like-for-like#
		Russia			72,138	102,851			-30%		-17%
		Asia			3,877	5,665			-32%		-7%
		ROW			14,719	11,677			+26%		0%
		Central Asia			27,201	33,509			-19%		-8%
		Eastern & Southern Europe			17,859	21,125			-15%		-3%
		Total			135,794	174,827			-22%		-12%

# Where used, like-for-like measures are stated on a constant currency basis adjusted to exclude acquisitions impacting for the first time, event timing differences and biennial events.

Russia

(Moscow, St. Petersburg, Novosibirsk, Krasnodar, Ekaterinburg)

During the year ITE held 116 events in Russia (2014: 118), with total volume sales this year of 312,600m² (2014: 380,200m²). Revenue of £72.1 million was 30% lower than the previous year, reflecting the significant weakening of the Russian Ruble and an increasingly more difficult trading environment as the year progressed. On a like-for-like basis volume sales in Russia decreased by 20% and revenues decreased by 17% from the prior year.

The Russian economy has been in a recessionary environment through all of last year with the effects on trading volumes increasing as the year progressed. The first half of the year was relatively unaffected as this benefited from more benign booking conditions in spring/summer 2014. The second half of the year was increasingly impacted from a deepening economic recession exacerbated by the rapid fall in oil prices. The Group saw a contraction in all sectors across the Russian business with construction and energy most impacted.

Moscow is ITE's largest office in Russia accounting for around 85% of the region's revenues.  The office operates the Group's largest events a number of which are the 'number one, must attend' events which partially help insulate the Group in the event of economic weakness. Moscow's volume sales for the year were 202,400m² (2014: 243,700m²); a fall of 18% on a like-for-like basis.

The leading events in Moscow produced a mixed performance this year. The portfolio of industrial events held in the first quarter performed relatively strongly with some events showing good levels of growth, however, performance declined from the second quarter onwards with all major events showing a fall in prior year volumes. The Moscow International Travel and Tourism exhibition which is held annually in March delivered sales of 16,300m² (2014: 20,000m²) as the devaluing Ruble impacted Russian international tourism. The Group's largest event Mosbuild, which in common with other construction businesses in Russia was impacted by the economic conditions and local competition, saw volumes fall by 38% to 40,300m² (2014: 65,400m²). The logistics event TransRussia saw volumes decline by 21% to 7,900m² (2014: 10,000m²), whilst the security event, Moscow International Security & Protection performed a little better with volumes of 11,100m² (2014: 11,700m²). The biennial Moscow International Oil and Gas Event returned in June and reflected the decline in oil prices delivering 18,500m² (2013: 24,000m²). The key event for the Group in September is WorldFood Moscow which proved relatively resilient, growing its visitor numbers over the prior year and suffering only a 12% fall in volumes to 22,600m², as supplier substitution offset a decline in the traditional European supplier base.

The Group operated 18 events from the St Petersburg office during the year, with overall volume sales of 23,400m² (2014: 27,200m²). Performance was in line with Moscow with most shows showing a decline in volumes from the prior year with those events in industries reliant on capital expenditure, such as construction and mining most impacted. The exception was ExpoElectronica, the international radio-electronics event, which grew by 1% as it took market share.

In Novosibirsk, Siberia, ITE is the anchor tenant in the city's main venue. The international quality space it offers has provided a platform for good growth in the Group's business in this region in recent years. However, this trend reversed during 2014 as the region moved into a recessionary environment and this continued further in 2015. During the year the region held 36 events (2014: 34), with overall volume sales declining to 30,200m² (2014: 41,500m²) with all sectors affected.

The Krasnodar region in southwest Russia is one of the most prosperous outside Moscow. The exhibition portfolio covers a broad range of sectors, the largest events being in the agriculture and construction sectors. The region fared better than others, buoyed by the relative resilience of its agricultural exhibitions. In total this office contributed volume sales of over 52,500m² (2014: 60,000m²). Despite the decline in sales volumes this year, the Group's two largest events in Krasnodar continues to be restricted by the size of the venue.

The Group has now become the anchor tenant at a new 28,000m² venue in the city, which opened ahead of schedule in November 2015, and in time to house ITE's agricultural event, YugAgro, which grew by nearly 20% over the prior edition. This new facility will allow ITE's largest events to grow and the business to expand into new industry sectors as the economy recovers.

Central Asia

ITE's principal offices in Central Asia are in Kazakhstan, Azerbaijan and Uzbekistan.

All of the economies in this region are heavily dependent on Oil and Gas for their overseas earnings and economic wealth and in the case of Kazakhstan a significant level of trade with Russia as well. The fall in the oil price and the Russian economic recession have had an increasingly significant impact on trading conditions within the region as the year progressed.

This year ITE organised a total of 79 events (2014: 79) across these territories delivering total volume sales of 83,000m² (2014: 103,100m²) and revenues of £27.2 million (2014: £33.5 million). Overall, on a like-for-like basis volumes decreased by 9% over the previous year with revenues being impacted by the negative effects of foreign exchange movements, particularly in Azerbaijan which saw a 33% devaluation of the Manat in January 2015 and in Kazakhstan where the Tenge has devalued by over 60% in the last 18 months.

Kazakhstan is the Group's largest office in the region selling 45,200m² (2014: 47,100m²). Trading in the first half of the year includes the largest event in the region, Kazakhstan Oil & Gas Exhibition (KIOGE), which took place in Almaty in October 2014 and was slightly smaller than the prior edition at 6,800m² (2014: 8,000m²). Aside from this event the first half was relatively strong with good growth at a number of events, led by food and packaging. The second half of the year saw a more mixed performance as the effects of a falling oil price began to feed through to the trading results, with construction most impacted.

Volumes in Azerbaijan contracted for the first time since the financial recession of 2008/09, as a lesser biennial pattern, the oil price fall and the subsequent Manat devaluation impacted the business. This year the region achieved volume sales of 25,600m² (2014: 42,000m²) a decrease of 22% on the prior year on a like-for-like basis. Although certain sectors such as Food, Logistics and Health performed ahead of the prior year the impact of a decrease in oil and telecoms dragged down the overall revenue performance, with like for like revenues down 18% on the prior year.

ITE's Uzbekistan business performed well in 2015 selling 11,500m² (2014:13,100m²) in their weaker biennial year due to resilient local exhibitions and some new launches. Revenues increased by 1% 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 147,000m² in 2015 (2014: 174,300m²), reflecting the continued impact of the political crisis in Ukraine. On a like-for-like basis this represented a decrease of 9% in volumes.

Trading in Ukraine continues to be severely impacted by on-going geopolitical issues. ITE runs all of its Ukrainian events in Kiev, and its business there now represents 2% of Group profits for this financial year (3% in 2014). During the year it has continued to operate the majority of its events, albeit with fewer exhibitors, although visitor numbers have held up very well. Overall volume sales for the year were 26,500m² (2014: 35,400m²) a 25% decrease in comparison to the prior year, with revenues lower by 48% as the Ukrainian Hryvnia devalued further during the year. Despite these significant falls in volumes the business remains profitable and has recently been active in launching new events. With a population of over 45 million people and the potential for economic recovery, ITE remains committed to operating its business in Ukraine and believes it offers attractive returns in the longer-term.

Overall total volumes in Turkey were 120,400m² (2014: 138,900m²), reflecting good growth in the majority of events and the absence of the biennial Ankomak event. On a like-for-like basis volume sales were 4% lower than last year. During the year the region has focused on consolidating its operations under one roof and integrating Eurasia Rail, which held its first event under ITE ownership, selling circa 10,000m² and performing in line with initial expectations. The travel event EMITT again performed well and ahead of the prior edition. Turkeybuild, the pre-eminent construction event in Turkey, took place in late April and delivered its largest ever event at 40,000m² (2014: 36,300m²), taking advantage of recently completed additional venue space. In September the Group saw further strong growth at the WorldFood Istanbul and the successful launch of the Istanbul Water Exhibition.

Asia

The Group's operations in this region are based in India, China and South East Asia. These regions represent relatively new markets for ITE in which to grow our existing products and develop new sectors. These markets are characterised by faster growing economies, underpinned by a rapidly expanding aspirational middle class population which is expected to drive consumer demand. In addition, they have relatively immature exhibition industries for the size of their economies and these two factors combine to offer excellent growth opportunities for ITE over the medium-term. The Group's operations in this region are largely through a series of joint venture arrangements and the Group's income statement reflects only those revenues over which it has majority ownership, which totalled £3.9 million during this weaker biennial year (2014: £5.5 million). In comparison revenues generated by 100% of the joint venture and associate businesses totalled around £27 million during the year.

The Indian exhibition industry offers significant potential but is currently restricted by the lack of international quality venue space in the country. The Group operates two business in India: one through a small wholly-owned subsidiary, ITE India, and the other through ABEC, India's largest private exhibition organiser in which ITE increased its stake from 28.3% to 60% in October 2015. ABEC's portfolio of over 20 exhibitions across different industry sectors includes Acetech - India's leading construction event. Both businesses performed well this year, ITE India had its biennially quieter year but added some small new launches, whilst ABEC delivered record profits with a strong performance at the Acetech events.

In China the Group operates through its Hong Kong headquartered 50% joint venture partner Sinostar which runs the Chinacoat/Surface Finishing China event. The November 2014 event was a record size selling over 36,000m², with further strong growth expected at the November 2015 event which will be reflected in next years' financial results. The Group is now expanding its portfolio of events in the coatings sector with launches in Kuala Lumpur (May '16), Thailand (March '17), and the addition of the complementary Fastener Expo acquired in November 2015 will further enhance the offering in this fast growing sector.

In South East Asia the Group operates through three organisations based in Malaysia and Indonesia. In Kuala Lumpur, Malaysia the Group now owns 100% of Tradelink (having acquired the minority's 25% stake in November 2015) which runs the Metaltech event, serving the machine tool technology and metal fabrication industries. The event, which sells over 12,000m², takes place each May in Kuala Lumpur and performed ahead of the previous edition, although it is likely to remain at its present size until construction of a new venue is completed in two years' time. Also based in Kuala Lumpur is the Group's 50% joint venture, ECMI, a pan-ASEAN organiser operating in Malaysia, Indonesia, Vietnam and Myanmar, and traditionally operating in the professional beauty, life-sciences, and oil & gas sectors.

In Jakarta, Indonesia, the Group owns 50% of PT Debindo which runs the Indobuildtech series of construction exhibitions, the largest of which takes place annually in Jakarta and is over 14,000m² in size. The Group has already begun to leverage its international sales expertise in this sector securing international participation at the 2015 event, and now has an opportunity to significantly increase this participation with the move of the event to the brand new International Convention and Exhibition Centre. This new venue of 50,000m² will offer much needed expansion space in an international class facility.

RoW

The Group's RoW results in 2015 are focused on the UK fashion industry. In MODA the Group owns the leading midmarket fashion event for Womenswear, Menswear, Footwear and Lingerie which runs twice a year in Birmingham. In London the Group operates Bubble, a niche high-end Childrenswear event; Jacket Required, a designer-led menswear event; and Scoop, a designer-led Womenswear event. Overall the portfolio achieved volumes sales of 41,800 m², a 2% decline on the prior year with continued growth in the London-based events, especially at Jacket Required and Scoop, partially offsetting declines at MODA which continues to see the effects of a changing market place for midmarket independent fashion retailers. The Group is now taking its expertise in the fashion sector outside the UK and is increasing its stake to a 51% controlling interest in "The Hub" a contemporary menswear event which is now located in Shanghai.

Lentewenc, based in Warsaw, in which the Group has a 40% stake, continued to build its business and now runs events in 4 sectors (Construction, Food, Healthcare and Transport), with food being the largest and fastest growing. In total Lentewenc sold 4,900m² this year an increase of over 50% on the previous year.

Chief Financial Officer's statement

Revenue and gross profit

Revenue for the year was £135.8 million (2014: £174.8 million) and gross profit for the year was £62.2 million (2014: £80.8 million), maintaining a gross margin of 46% (2014: 46%). 

Administrative expenses across the Group decreased to £34.1 million from £42.0 million in the previous year. Administrative expenses include significant non-cash items, including an amortisation charge of £13.1 million on acquired intangibles (2014: £11.8 million), a charge for share-based payments of £0.1 million (2014: £0.5 million) and a foreign exchange gain of £5.9 million arising on the revaluation of foreign currency monetary assets (2014: £4.0 million). 2014 administrative expenses also included an impairment charge of £6.2 million on goodwill relating to our business in Ukraine.  Administrative expenses also include non-headline costs on completed and pending transactions of £2.5 million (2014: £1.6 million).

Excluding these non-cash items, administrative expenses decreased by £0.7 million to £26.8 million (2014: £27.5 million) as a result of cost saving initiatives within the Group, together with the impact of weaker emerging market currencies, notably the Ruble, in which a significant portion of overhead costs are incurred. Overall, Group administrative expenses excluding non-cash items and transaction related costs represented 17% of revenue (2014: 15%).

Operating profit was £32.1 million against a prior year profit of £41.8 million, resulting in net operating margins of 24% (2014: 24%) for the year.

Headline pre-tax profit for the year was £47.2 million (2014: £60.3 million).

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

	2015	2014
	£000	£000
Profit on ordinary activities before taxation	31,546	41,478
Operating items
Amortisation of acquired intangible assets	13,134	11,815
Impairment of goodwill	-	6,212
Profit on disposal of investments included within administrative expenses	-	(716)
Recognition of negative goodwill from bargain purchase	-	(463)
Transaction costs on completed and pending acquisitions	2,534	1,582
Tax on income from associates & joint ventures	1,208	868
Financing items
Gain on revaluation of contingent consideration	(2,192)	(297)
Loss / (gain) on revaluation of put option liabilities over non-controlling interests	929	(318)
Imputed interest charges on put option liabilities	-	100
Headline pre-tax profit	47,159	60,261

Other operating income

£0.4 million  (2014: £0.4 million)

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

Investment revenue

£2.9 million  (2014: £1.0 million)

Investment revenue came from interest on bank deposits of £0.3 million (2014: £0.4 million), a gain on the revaluation of contingent consideration of £2.2 million (2014: £0.3 million) and a gain on cashflow hedges of £0.4 million (2014: nil).  In the prior year there was also a gain on revaluation of equity options of £0.3 million.

Finance costs

£3.4 million  (2014: £1.4 million)

Finance costs represent the interest cost of the Group's borrowings of £1.6 million (2014: £0.7 million), bank charges of £0.9 million (2014: £0.6 million) and a loss on the revaluation of put options of £0.9 million (2014: nil).  In the prior year there was also an imputed interest charge arising on the discounting of the Group's put option liabilities of £0.1 million.

Tax charge

The tax charge of £5.0 million represents 16% of profit before tax (2014: 18%). Tax on associate profits, which is presented within the share of profit from associates, was £1.2 million (2014: £0.9 million).  The total tax charge of £6.2 million (2014: £8.3 million) represents 19% of total profits before tax (2014: 20%).

Earnings per share

Basic earnings per share decreased by 24% to 10.5p (2014: 13.8p). Diluted earnings per share decreased by 25% to 10.4p (2014: 13.8p).

The Group achieved headline diluted earnings per share of 15.3p (2014: 20.2p). Headline diluted earnings per share is 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, imputed interest charges on discounted put option liabilities and transaction costs relating to completed and pending acquisitions and disposals.

Return to shareholders

The Group has recommended a final dividend of 4.9p per share for 2014, to bring the total dividend for the year to 7.4p per share (2014: 7.4p), which is covered 2.1 times by earnings.

Maintaining the dividend reflects the Group's commitment 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.

Cash flow

Cash generated from operations in the year was £37.0million (2014: £48.5 million), which after adjusting for the non-cash foreign exchange gain of £5.9 million (2014: £4.0 million) and venue utilisation of £0.8 million (2014: advances of £6.9 million) represents 88% of headline profits (2014: 98%). This reduction reflects a working capital drain of £3.9 million as revenues contracted this year.  The principal applications of cash were £55.6 million applied to acquisitions (2014: £50.7 million); £6.6 million paid in tax (2014: £8.7 million); and £18.7 million was distributed as dividends to the Group's shareholders (2014: £17.4 million). The increase in net debt balances over the year was £37.6 million, with the Group being £52.4 million in net debt at 30 September 2015 (2014: £14.8 million).

Acquisitions

On 22 December 2014, ITE acquired Breakbulk Holdco Limited for cash consideration of £26.9 million, £1.3 million of which was deferred. The acquired business has contributed £3.5 million of revenue and £1.8 million of profit to Group results since acquisition.

On 27 January 2015, the Group acquired TF Fuarcilik ve Organizasyon AS, a company incorporated in Turkey which organises the Eurasia Rail exhibition, for cash consideration of £7.3 million, of which £1.2 million was deferred and paid during the year.  The acquired business has contributed £1.5 million to Group revenue and £1.0 million to profit since acquisition.

On 10 March 2015, the Group acquired 50.1% of a portfolio of events including Africa Oil Week for cash consideration of £16.0 million and shares in Africa Oil Week Ltd of £15.3 million.  The acquired business has contributed £0.1 million to Group revenue and profit since acquisition. 

Investments in Joint Ventures and Associates

On 5 February 2015, ITE's wholly owned Russian subsidiary, LLC ITE Russia, established a 50:50 joint venture, ITE MF, with MF Rus, a Russian based subsidiary of Messe Frankfurt, for an investment of £3.2 million.  Additional contingent consideration of £0.4 million was subsequently recognised and paid during the year.

Consolidated Statement of Financial Position

The Group's Consolidated Statement of Financial Position at 30 September 2015 is summarised in the table below:

	30 September 2015			30 September 2014
	Assets £m	Liabilities £m	Net assets £m	Net assets £m
Goodwill and other intangible assets	137.8	-	137.8	102.4
Interests in associates & joint ventures	56.8	-	56.8	52.4
Property, plant and equipment	1.7	-	1.7	2.2
Venue advances and prepayments	6.4	-	6.4	10.2
Cash	17.3	-	17.3	28.1
Bank loan	-	(69.6)	(69.6)	(42.9)
Other current assets and liabilities	39.8	(75.1)	(35.0)	(39.1)
Provisions - non-current	-	(0.2)	(0.2)	(0.2)
Deferred tax	1.7	(10.0)	(8.6)	(9.0)
Other non-current assets and liabilities	1.5	(8.8)	(7.3)	1.3
Total as at 30 September	263.0	(163.7)	99.3	105.4

Net assets decreased by £6.1 million to £99.3 million. The main changes are in net debt (an increase of £37.6 million) and goodwill and other intangible assets (an increase of £35.4 million).  The movement in net assets since the prior year primarily reflects net profits of £26.6 million and a share issue of £12.0 million, offset by translational losses of £26.4 million and dividends (including minority dividends) of £18.7 million.

Goodwill and intangible assets

Goodwill and intangible assets have increased during the year due to acquisitions made in the period.  This has more than offset the decrease resulting from the retranslation of overseas balances to Sterling at year end exchange rates, and from the amortisation charge in the year. The intangible assets balance represents acquired customer relationships, trademarks and licenses, visitor databases and computer software.

Investment and capital expenditure

The Group's capital expenditure on plant and equipment decreased during the year to £0.5 million (2014: £1.4 million) and included exhibition equipment, office fixtures and fittings. Capital expenditure on computer software in the year was £1.3 million (2014: £1.5 million). This reflects continued investment in computer software to enhance our exhibition visitor experiences, develop our office network and support our sales, marketing and accounting functions.

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.

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 advances and prepayments are included in the Consolidated Statement of Financial Position under non-current and current assets.

At 30 September 2014, the Group's Sterling value of the outstanding balances of advance payments and venue loans was £6.4 million (2014: £10.2 million) as follows:

	30 September 2014 £m	New £m	Repayments £m	Forex £m	30 September 2015 £m
Russia	7.5	1.7	(2.2)	(2.7)	4.3
Central Asia	0.6	1.1	(1.3)	(0.1)	0.3
Eastern & Southern Europe	2.1	0.8	(0.8)	(0.3)	1.8
Total	10.2	3.6	(4.3)	(3.0)	6.4

Share capital

During the year the Company issued 7,253,107 (2014: 348,000) ordinary shares of 1p.  88,298 of the total new issues were pursuant to the exercise of options and yielded aggregate consideration of £889; the remainder were pursuant to a public placing which yielded aggregate consideration of £12 million. As at 30 September 2015 the Employees Share Option Trust ('ESOT') held 3,168,153 (1.2%) of the Company's issued share capital (2014: 3,703,588 (1.5%)).

Reserves

The movement in the translation reserve from £33.3 million to £59.7 million represents the loss on the retranslation of the Group's overseas assets denominated in foreign currencies. This is driven primarily by movements in Sterling/Ruble exchange rates. The increase in the put option reserve and non-controlling interests is the result of the acquisition of the Africa Oil Week business.

Treasury

During the year, the Group experienced a net foreign exchange gain of £5.9 million (2014: £4.0 million). The exchange rate for the Euro at 30 September 2015 was €1.35:£1 (30 September 2014: €1.28:£1); the exchange rate for the Ruble at 30 September 2015 was R99.9:£1 (30 September 2014: R63.8:£1); the exchange rate for the US Dollar at 30 September 2015 was $1.52:£1 (30 September 2014: $1.63:£1).

During the year, 38% of the Group's sales were priced in Euros, 22% in Rubles, 12% in GBP, 3% in US Dollars, with the balance being in various local currencies.

The average exchange rates used to translate sales into Sterling were: R84.4:£1 (2014: R58.7), €1.28:£1 (2014: €1.22:£1). The Group estimates that a 1 cent movement in the Euro impacts profit by £300,000 and a 1 Ruble movement impacts profit by £100,000. 

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 Euro denominated sales derived from outside Russia and the CIS; and

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

At 30 September 2015, the Group had entered into forward contracts to sell Euros for Sterling between October 2015 and September 2018. The value of the contracts is €55.4 million at an average rate of €1.24:£1. These instruments are designated as hedging instruments.

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.

Group borrowing facilities

The Group has long-term borrowing facilities provided by Barclays Bank and HSBC. The arrangements extend until 31 March 2019 and consist of a revolving credit facility totalling £100 million. The facility amortises by £7 million in each of June 2016, June 2017 and June 2018.

At 30 September 2015 the Group had borrowings under this facility of £69.6 million in Sterling (£65.0 million) and US Dollars (£4.6 million) (2014: £42.9 million in Sterling).

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 management will review the Group's exposure to interest rate movements and fix interest rates to the extent deemed appropriate. 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.

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, annual and 3-years' 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.

The Group is conscious of 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 £17.3 million as at 30 September 2015, 72% was held in institutions with a rating of grade A or above and 19% in B.

Going concern and Viability Statement

In accordance with provision C.2.2 of the 2014 revision of the Corporate Governance Code, the Directors have assessed the prospect of the Group over both a one- and a three-year period.  The one-year period has a greater level of certainty and is, therefore, used to set detailed budgetary targets at all levels across the Group.  The three-year period offers less certainty but is aligned with the Board's periodic strategic review, as well as the long-term incentives offered to management.

The Director's assessment considered the Group's trading performance, cash flows, covenant compliance and other key ratios over the period.  These metrics are subject to sensitivity analysis which evaluates the potential impact of the Group's principal risks, as disclosed in the Risk Committee report.  On the basis of this and other matters considered and reviewed by the Board during the year, the Board has reasonable expectations that the Company will be able to continue in operation and meet its liabilities as they fall due over the periods used for the assessment. For this reason, they continue to adopt the going concern basis in preparing the financial statements.  In doing so, it is recognised that such future assessments are subject to a level of uncertainty that increases with time and, therefore, future outcomes cannot be guaranteed or predicted with certainty.

Neil Jones

Chief Financial Officer

Consolidated Income Statement For the year ended 30 September 2015
		2015	2014
	Notes	£000	£000
Continuing operations
Revenue	4	135,794	174,827
Cost of sales		(73,617)	(94,067)
Gross profit		62,177	80,760
Other operating income		372	369
Administrative expenses		(26,932)	(27,982)
Amortisation of acquired intangibles		(13,134)	(11,815)
Impairment loss		-	(6,212)
Foreign exchange gain on operating activities		5,932	3,986
Total administrative expenses		(34,134)	(42,023)
Income from associates and joint ventures		3,683	2,725
Operating profit		32,098	41,831
Investment revenue	5	2,883	1,026
Finance costs	6	(3,435)	(1,379)
Profit on ordinary activities before taxation	3	31,546	41,478
Tax on profit on ordinary activities	7	(4,976)	(7,399)
Profit for the period		26,570	34,079
Attributable to:
Equity holders of the parent		26,179	33,903
Non controlling interests		391	176
		26,570	34,079
Earnings per share (p)
Basic	9	10.5	13.8
Diluted	9	10.4	13.8

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

Consolidated Statement of Comprehensive Income For the year ended 30 September 2015
		2015	2014
	Notes	£000	£000
Profit for the period attributable to shareholders		26,570	34,079
Cash flow hedges:
Movement in fair value of cash flow hedges		79	3,708
Fair value of cash flow hedges released to the income statement		640	741
Currency translation movement on net investment in subsidiary undertakings		(26,434)	(21,149)
		855	17,379
Tax relating to components of comprehensive income	7	(149)	(912)
Total comprehensive income for the period		706	16,467
Attributable to:
Owners of the company		315	16,291
Non-controlling interests		391	176
		706	16,467

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

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

Consolidated Statement of Changes in equity

For the year ended 30 September 2015

	Share capital	Share premium account	Merger reserve	Capital Redemp-tion 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 2014	2,497	2,947	2,746	457	(5,641)	133,126	(1,498)	(33,269)	3,104	104,469	942	105,411
Net profit for the year	-	-	-	-	-	26,179	-	-	-	26,179	391	26,570
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(26,434)	-	(26,434)	-	(26,434)
Movement  in fair value of cash flow hedges	-	-	-	-	-	-	-	-	79	79	-	79
Fair value of cash flow hedges released to the income statement	-	-	-	-	-	-	-	-	640	640	-	640
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-	(149)	(149)	-	(149)
Total comprehensive income for the period	-	-	-	-	-	26,179	-	(26,434)	570	315	391	706
Dividends paid	-	-	-	-	-	(18,398)	-	-	-	(18,398)	(317)	(18,715)
Exercise of share options	1	-	-	-	816	(810)	-	-	-	7	-	7
Share-based payments	-	-	-	-	-	148	-	-	-	148	-	148
Issue of shares	72	11,928	-	-	-	-	-	-	-	12,000	-	12,000
Tax debited to equity	-	-	-	-	-	(214)	-	-	-	(214)	-	(214)
Acquisition of subsidiary	-	-	-	-	-	-	(15,345)	-	-	(15,345)	15,345	-
Balance as at 30 September 2015	2,570	14,875	2,746	457	(4,825)	140,031	(16,843)	(59,703)	3,674	82,982	16,361	99,343

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

Consolidated Statement of Changes in Equity

For the year ended 30 September 2015

	Share capital	Share premium account	Merger reserve	Capital Redemp-tion 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 2013	2,494	2,938	2,746	457	(3,530)	119,335	(7,108)	(12,120)	(433)	104,779	4,519	109,298
Net profit for the year	-	-	-	-	-	33,903	-	-	-	33,903	176	34,079
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	(21,149)	-	(21,149)	-	(21,149)
Movement  in fair value of cash flow hedges	-	-	-	-	-	-	-	-	3,708	3,708	-	3,708
Fair value of cash flow hedges released to the income statement	-	-	-	-	-	-	-	-	741	741	-	741
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-	(912)	(912)	-	(912)
Total comprehensive income for the period	-	-	-	-	-	33,903	-	(21,149)	3,537	16,291	176	16,467
Dividends paid	-	-	-	-	-	(17,722)	-	-	-	(17,722)	(668)	(18,390)
Exercise of share options	3	9	-	-	1,640	(217)	-	-	-	1,435	-	1,435
Share-based payments	-	-	-	-	-	447	-	-	-	447	-	447
Purchase of shares for ESOT	-	-	-	-	(3,751)	-	-	-	-	(3,751)	-	(3,751)
Tax credited to equity	-	-	-	-	-	60	-	-	-	60	-	60
Sale of minority interest	-	-	-	-	-	94	(283)	-	-	(189)	34	(155)
Acquisition of subsidiary	-	-	-	-	-	-	-	-	-	-	-	-
Exercise of put option on acquisition of non-controlling interest	-	-	-	-	-	(2,774)	5,893	-	-	3,119	(3,119)	-
Balance as at 30 September 2014	2,497	2,947	2,746	457	(5,641)	133,126	(1,498)	(33,269)	3,104	104,469	942	105,411

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

Consolidated Statement of Financial Position 30 September 2015
		2015	2014
		£000	£000
Non-current assets
Goodwill		72,490	67,016
Other intangible assets		65,313	35,405
Property, plant and equipment		1,708	2,198
Interests in associates & joint ventures		56,782	52,367
Venue advances and prepayments		2,131	6,311
Derivative financial instruments		1,528	1,315
Deferred tax asset		1,652	1,931
		201,604	166,543
Current assets
Trade and other receivables		41,225	44,666
Tax prepayment		945	2,211
Derivative financial instruments		1,951	1,985
Cash and cash equivalents		17,269	28,145
		61,390	77,007
Total assets		262,994	243,550
Current liabilities
Trade and other payables		(15,944)	(21,615)
Deferred income		(49,831)	(60,776)
Derivative financial instruments		(9,054)	(1,515)
Provisions		(137)	(181)
		(74,966)	(84,087)
Non-current liabilities
Bank loan		(69,616)	(42,900)
Provisions		(190)	(220)
Deferred tax liabilities		(10,045)	(10,932)
Derivative financial instruments		(8,834)	-
		(88,685)	(54,052)
Total liabilities		(163,651)	(138,139)
Net assets		99,343	105,411
Equity
Share capital		2,570	2,497
Share premium account		14,875	2,947
Merger reserve		2,746	2,746
Capital redemption reserve		457	457
ESOT reserve		(4,825)	(5,641)
Retained earnings		140,031	133,126
Translation reserve		(59,703)	(33,269)
Hedge reserve		3,674	3,104
Put option reserve		(16,843)	(1,498)
Equity attributable to equity holders of the parent		82,982	104,469
Non controlling interests		16,361	942
Total equity		99,343	105,411

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

The financial statements of ITE Group plc, registered company number 01927339, were approved by the Board of Directors and authorised for issue on 1 December 2015.  They were signed on their behalf by:

Russell Taylor                                   Neil Jones           

Chief Executive Officer                   Chief Financial Officer

Consolidated Cash Flow Statement

30 September 2015

	Notes	2015	2014
		£000	£000
Operating activities
Operating profit from continuing operations	4	32,098	41,831
Adjustments for non cash items:
Depreciation and amortisation	3	14,574	13,289
Impairment of goodwill	3	-	6,212
Share-based payments		148	447
Share of profit from associates & joint ventures		(3,683)	(2,725)
Decrease in provisions		(74)	(424)
(Profit) / loss on disposal of plant, property and equipment	3	(6)	52
Foreign exchange gain on operating activities	3	(5,932)	(3,986)
Profit on disposal of investments		-	(716)
Recognition of negative goodwill from bargain purchase		-	(463)
Fair value of cash flow hedges recognised in the income statement		1,073	725
Dividends received from associates & joint ventures		2,632	3,734
Operating cash flows before movements in working capital		40,830	57,976
Decrease in receivables		10,744	14,683
Venue advances and loans		(3,574)	(11,613)
Utilisation & repayment of venue loans		4,411	4,689
Decrease in deferred income		(12,908)	(16,030)
Decrease in payables		(2,541)	(1,244)
Cash generated from operations		36,962	48,461
Tax paid		(6,635)	(8,691)
Net cash from operating activities		30,327	39,770
Investing activities
Interest received	5	258	411
Investment in associates & joint ventures		(7,046)	(35,118)
Proceeds received from demerger		-	2,482
Acquisition of businesses - cash paid		(48,787)	(13,701)
Cash acquired through acquisitions		280	-
Purchase of plant, property & equipment and computer software		(1,740)	(2,886)
Disposal of plant, property & equipment and computer software		25	222
Disposal of minority stake		-	128
Cash paid to acquire non controlling interests		-	(4,456)
Net cash utilised on investing activities		(57,010)	(52,918)
Financing activities
Equity dividends paid		(18,681)	(17,407)
Dividends paid to non-controlling interests		(317)	(668)
Interest paid	6	(2,506)	(1,263)
Proceeds from the issue of share capital & exercise of share options		12,007	1,435
Acquisition of shares for ESOT		-	(3,751)
Drawdown of borrowings		26,716	22,323
Net cash inflow from financing activities		17,219	669

		2015	2014
		£000	£000
Net decrease in cash and cash equivalents		(9,464)	(12,479)
Cash and cash equivalents at beginning of period		28,145	44,040
Effect of foreign exchange rates		(1,412)	(3,416)
Cash and cash equivalents at end of period		17,269	28,145
Cash generated from the business
Cash generated from operations		36,962	48,461
Interest received		258	411
Interest paid		(2,506)	(1,263)
		34,714	47,609
Free cash flow from the business
Cash generated from the business		34,714	47,609
Tax paid		(6,635)	(8,691)
		28,079	38,918

Net debt reconciliation

	At 1 October 2014	Cashflow	Foreign exchange	At 30 September 2015
	£000	£000	£000	£000
Cash	28,145	(9,464)	(1,412)	17,269
Debt due within one year	-	-	-	-
Debt due after one year	(42,900)	(26,716)	-	(69,616)
Net debt	(14,755)	(36,180)	(1,412)	(52,347)

The accompanying notes 1 to 9 form an integral part of the consolidated financial statements.

Notes to the Consolidated Financial Statements

30 September 2015

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 2015. 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 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 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 ended 30 September 2015

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

New, amended and revised Standards	Effective date
Amendments to IAS 19 Defined Benefit Plans	1 February 2015
Annual improvements 2010-2012 Cycle:
Amendments to IFRS 2 Share-based Payment	1 February 2015
Amendments to IFRS 3 Business Combinations	1 February 2015
Amendments to IFRS 8 Operating Segments	1 February 2015
Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets	1 February 2015
Amendments to IAS 24 Related Party Disclosures	1 February 2015
Annual improvements 2011-2013 Cycle:
Amendments to IFRS 3 Business Combinations	1 January 2015
Amendments to IFRS 13 Fair Value Measurement	1 January 2015
Amendments to IAS 40 Investment Property	1 January 2015

The adoption of these new standards and interpretation has not changed any previously reported figures.

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):

New, amended and revised Standards	Effective date
Annual improvements 2012-2014 cycle:
Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations	1 January 2016
Amendments to IFRS 7 Financial Instruments: Disclosures	1 January 2016
Amendments to IAS 19 Employee Benefits	1 January 2016
Amendments to IAS 34 Interim Financial Reporting	1 January 2016
Amendments to IAS 1 Presentation of Financial Statements: Disclosure initiative	1 January 2016
Amendments IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of acceptable methods of depreciation and amortisation	1 January 2016
Amendments to IAS 27 Separate Financial Statements: Equity method in separate financial statements	1 January 2016
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or contribution of assets between an investor and its associate or joint venture	1 January 2016
Amendments to IFRS 11 Joint arrangement: Accounting for acquisitions of interests	1 January 2016
IFRS 14 Regulatory Deferral Accounts	1 January 2016
IFRS 15 Revenue from Contracts with Customers	1 January 2018
IFRS 9 Financial Instruments	1 January 2018

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

	2015	2014
	£000	£000
Profit on ordinary activities before taxation	31,546	41,478
Operating items
Amortisation of acquired intangible assets	13,134	11,815
Impairment of goodwill	-	6,212
Profit on disposal of investments included within administrative expenses	-	(716)
Recognition of negative goodwill from bargain purchase	-	(463)
Transaction costs on completed and pending acquisitions	2,534	1,582
Tax on income from associates & joint ventures	1,208	868
Financing items
Gain on revaluation of contingent consideration (notes 5 & 6)	(2,192)	(297)
Loss /(gain) on revaluation of put option liabilities over non-controlling interests (notes 5 & 6)	929	(318)
Imputed interest charge on put option liabilities (notes 5 & 6)	-	100
Headline pre-tax profit	47,159	60,261

Profit on ordinary activities before taxation is stated after charging/(crediting):

	2015	2014
	£000	£000
Staff costs	30,358	40,514
Depreciation of property, plant and equipment	696	769
Amortisation of intangible assets	13,878	12,520
Impairment of goodwill	-	6,212
Profit on disposal of investments included within administrative expenses	-	(716)
Recognition of negative goodwill from bargain purchase	-	(463)
(Profit) / loss on sale of property, plant and equipment	(6)	52
Operating lease rentals - land and buildings	2,352	2,589
(Gain) / loss on derivative financial instruments - cash flow hedges (notes 5 & 6)	(433)	16
Loss / (gain) on derivative financial instruments - put options (notes 5 & 6)	929	(318)
Foreign exchange gain on operating activities	(5,932)	(3,986)

4  Segmental information

IFRS 8 introduced the term Chief Operating Decision Maker (CODM). The Senior Management Board is considered to be the CODM and consists of Mandy Hossami, Neil Jones (Chief Financial Officer), Suzanne King, Baris Onay, Nik Rudge, Alexander Shtalenkov, Russell Taylor (Chief Executive Officer), Mark Temple-Smith and Colette Tebbutt.

ITE's reportable segments are strategic business units that are based in different geographic locations, predominantly in 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.

The Group evaluates the performance of its segments on the basis of headline pre-tax profit and operating profit.

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.  No individual customer amounts to more than 10% of Group revenues.

Year ended 30 September 2015	Russia	Central Asia	Eastern & Southern Europe	Rest of the World	Asia	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events / activities
Revenue	72,138	27,201	17,859	14,719	3,877	135,794
Headline pre-tax profit	37,260	8,606	6,758	(9,753)	4,288	47,159
Operating profit	33,621	8,090	1,347	(12,343)	1,383	32,098
By origin of sale
Revenue	44,933	14,272	21,013	44,165	11,411	135,794
Headline pre-tax profit	23,180	2,313	10,352	611	10,703	47,159
Operating profit	19,540	1,797	4,942	(1,979)	7,798	32,098
Operating profit						32,098
Investment revenue						2,883
Finance costs						(3,435)
Profit before tax						31,546
Tax						(4,976)
Profit after tax						26,570
Capital expenditure	93	155	99	1,337	56	1,740
Depreciation and amortisation	3,054	780	5,024	4,313	1,382	14,553
Balance Sheet
Assets*	44,539	13,127	41,747	91,157	69,827	260,397
Liabilities*	19,037	5,049	10,086	110,803	7,094	152,069
Non Current Assets*	27,693	6,437	30,322	70,401	65,099	199,952

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

The revenue in the year of £135.8 million includes £0.6 million (2014: £0.4 million) of barter sales.

Included within the headline pre-tax profit and operating profit of Rest of the World is £11.3 million and £8.9 million respectively of corporate costs.

Year ended 30 September 2014	Russia	Central Asia	Eastern & Southern Europe	Rest of the World **	Asia	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events / activities
Revenue	102,851	33,509	21,125	11,677	5,665	174,827
Headline pre-tax profit	44,051	11,804	7,621	(7,038)	3,823	60,261
Operating profit	39,369	11,343	(4,365)	(5,276)	760	41,831
By origin of sale
Revenue	69,371	19,443	24,871	49,113	12,029	174,827
Headline pre-tax profit	30,015	5,670	10,982	3,976	9,618	60,261
Operating profit	25,334	5,208	(1,004)	5,738	6,555	41,831
Operating profit						41,831
Investment revenue						1,026
Finance costs						(1,379)
Profit before tax						41,478
Tax						(7,399)
Profit after tax						34,079
Capital expenditure	622	278	240	1,680	66	2,886
Depreciation and amortisation	4,986	689	5,263	1,193	1,158	13,289
Balance Sheet
Assets*	73,577	18,043	41,106	39,239	67,433	239,398
Liabilities*	31,684	5,792	9,454	69,338	8,878	125,146
Non Current Assets*	47,421	9,476	30,577	15,166	61,972	164,612

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

** The 2014 Rest of the World segment was previously disclosed as UK & Western Europe.

Included within the headline pre-tax profit and operating profit of Rest of the World is £11.6 million and £11.0 million respectively of corporate costs.

5  Investment revenue

	2015	2014
	£000	£000
Interest receivable from bank deposits	258	411
Gain on revaluation of equity options	-	318
Gain on cashflow hedges	433	-
Gain on revaluation of contingent consideration	2,192	297
	2,883	1,026

6  Finance costs

	2015	2014
	£000	£000
Interest on bank loans	1,624	710
Bank charges	882	553
Loss on revaluation of put options	929	-
Loss on cashflow hedges	-	16
Imputed interest charge on discounted put option liabilities	-	100
	3,435	1,379

7  Tax on profit on ordinary activities

Analysis of tax charge for the year:

	2015	2014
	£000	£000
Group taxation on current year profit
UK corporation tax on profit for the year	(184)	(269)
Adjustment to UK tax in respect of previous years	(18)	293
	(202)	24
Overseas taxation - current year	7,362	9,366
Overseas taxation - previous years	213	(391)
	7,575	8,975
Current tax	7,373	8,999
Deferred tax
Origination and reversal of timing differences:
Current year	(1,993)	(1,106)
Prior year	(404)	(494)
	4,976	7,399

The tax charge for the year can be reconciled to the profit per the income statement as follows:

	2015	2014
	£000	£000
Profit on ordinary activities before tax	31,546	41,478
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20.5% (2014: 22%)	6,467	9,125
Effects of:
Expenses not deductible for tax purposes	111	(141)
Impairment of goodwill	-	1,177
Foreign exchange	(90)	96
Deferred tax assets not recognised	688	363
Withholding tax and other irrecoverable taxes	678	996
Adjustments to tax charge in respect of previous years	(125)	(592)
Deferred tax provision in respect of proposed dividends from overseas subsidiaries	90	298
Effect of different tax rates of subsidiaries operating in other jurisdictions	(2,088)	(3,323)
Associate tax	(755)	(600)
	4,976	7,399
	2015	2014
	£000	£000
Tax relating to components of comprehensive income;
Cash flow gains / (losses)  - Current	(134)	(163)
Cash flow gains / (losses)  - Deferred	(15)	(749)
	(149)	(912)
Tax relating to amounts credited / (charged) to equity;
Share options - Current	(43)	194
Share options - Deferred	(171)	(134)
	(214)	60
	(363)	(852)

8  Dividends

	2015	2014
	£000	£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2014 of 4.9p (2013 - 4.7p) per ordinary share	12,053	11,581
Interim dividend for the year ended 30 September 2015 of 2.5p (2014 -2.5p) per ordinary share	6,345	6,141
	18,398	17,722
Proposed final dividend for the year ended 30 September 2015 of 4.9p (2014 - 4.9p) per ordinary share	12,436	12,055

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 3,168,153 (2014: 3,703,588) ordinary shares representing 1.2% 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:

	2015	2014
	No.of shares (000)	No.of shares (000)
Weighted average number of shares:
For basic earnings per share	250,321	246,153
Effect of dilutive potential ordinary shares	333	326
For diluted and headline diluted earnings per share	250,654	246,479

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 £26.2 million (2014: £33.9 million). Basic and diluted earnings per share were 10.5p and 10.4p respectively (2014: 13.8p and 13.8p 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 15.3p per share (2014: 20.2p).  Headline basic earnings per share is 15.3p per share (2014: 20.2p).

	2015	2014
	£000	£000
Profit for the financial year attributable to equity holders of the parent	26,179	33,903
Amortisation of acquired intangible assets	13,134	11,815
Tax effect of amortisation of acquired intangible assets	(2,246)	(2,108)
Impairment of goodwill	-	6,212
Transaction costs on completed & pending acquisitions	2,534	1,582
Profit on disposal of investments	-	(716)
Recognition of negative goodwill from bargain purchase	-	(463)
Gain on revaluation of contingent consideration	(2,192)	(297)
Loss / (gain) on revaluation of put option liabilities over non-controlling interests	929	(318)
Imputed interest charge on put option liabilities	-	100
Headline earnings for the financial year after taxation	38,338	49,710

 Responsibility statement

The responsibility statement below has been prepared in connection with the Group's full annual report for the year ending 30 September 2015. 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 30 November 2015 and is signed on its behalf by:

Russell Taylor

Group Chief Executive Officer

Neil Jones

Group Chief Financial Officer

Dividend calendar

Final dividend 2015
Ex-dividend date	7 January 2016
Record date	8 January 2016
Payment date	8 February 2016

Interim dividend 2016
Ex-dividend date	23 June 2016
Record date	24 June 2016
Payment date	4 August 2016

 

END

 

 

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