RNS Number:8342L
ITE Group PLC
03 June 2003
ITE GROUP PLC
INTERIM RESULTS ANNOUNCEMENT
ITE Group plc, the international exhibitions specialist, today announces interim
results for the six months ended 31 March 2003.
Highlights:
*Turnover: #18.8 million (2002: #18.7 million)
*Headline profit before tax and non-recurring items up 144% to #2.2
million (2002: #0.9 million)
*Pre-tax profit: #1.2 million (2002: Loss before tax: #7.3 million)
*Gross margins improved to 36%, compared with 31% in 2002
*Top ten core events grew by 26% in terms of space sales and 23% in terms
of revenue
*Strengthening of key venue relationships, including new exclusive
contract to December 2007 signed with venue in St Petersburg
*Appointment of Russell Taylor as new Finance Director. Additional
strengthening of management in Moscow, St Petersburg, Kyiv and Istanbul
*Strong start to the second half. Strong forward order book and seven new
launches scheduled for the second half of the year
*Sensitivity to the US dollar reduced for the 2004 financial year
*Interim dividend of 0.5p per share
Commenting on the results, Ian Tomkins, Chief Executive, said:
"ITE has completed an encouraging six month period. The focus on our key brands
and most profitable markets has been rewarded by strong growth across each of
our top five events for the interim period. ITE is well placed to deliver strong
results for the full year with the currently buoyant Russian and CIS markets
underpinning the Group's future prospects. Our business is well poised for
further organic growth and we also see prospects to strengthen our business in
the sectors or markets where we specialise."
-Ends-
Enquiries:
Iain Paterson/Ian Tomkins 020 7596 5000
ITE Group plc
David Simonson/Nicola Davidson 020 7606 1244
Merlin Financial
Joint Statement of the Chairman and Chief Executive
ITE has completed an encouraging six month period. The focus on our key brands
and most profitable markets has been rewarded by strong growth across each of
our top five events for the interim period. These events represent 75% of our
gross profit contribution for the period and reflect the underlying strength of
our business in Russia and the CIS.
We have pursued an active assessment of ITE's key management and business needs
and have successfully made a necessary transition in the management team in
Moscow, as well as other management changes in Istanbul, St Petersburg and Kyiv.
Such changes will help ITE to manage its business better and to achieve growth
in the future.
We have looked to strengthen our key venue relationships and during the period
we agreed to provide #1.2m of loan funding to our venue partner in Kazakhstan to
help construct new and improved venue pavilions in Almaty. We were very pleased
to open our spring events in Kyiv in the newly built International Exhibition
Centre, which ITE has part funded by loan. Further, ITE provided #1.6m of loans
to our venue partner in St Petersburg, Russia, where we are pleased to announce
that we have a new exclusive contract to 31 December 2007. Currently we are
working closely with our key venue partner in Moscow to strengthen our long
standing relationship going forward. ITE is currently considering other
proposals to assist venue development and improve the infrastructure in our
growth markets to provide the necessary facilities to deliver first class
services to our valued customers.
We have launched three new profitable events in the interim period and have
another seven new launches scheduled for the second half of the year.
We have reduced our future sensitivity to the US dollar by re-weighting our
sales contracts for the 2004 financial year to be approximately 45% Euro based
sales and 30% US dollar based sales (previously 15% and 60% respectively).
However, the financial result for the full year to 30th September is sensitive
to movements in the US dollar exchange rate.
ITE has been actively meeting the challenges of the increasing competition in
our key markets. This has become more important in recent times as competitors
covet the attractive prospects within the markets in which we specialise. ITE is
very well placed to combat such threats given its long established relationships
and considerable local office infrastructure.
Management
Alex Bernstein who has worked with ITE since 1992 has stepped down from the
Board. He has made a substantial contribution to ITE in helping to build up the
business in Russia and the CIS over the last decade. We are delighted to welcome
Russell Taylor who joined the Board as Group Finance Director and Company
Secretary on 24 March 2003. He is a Chartered Accountant and his previous
experience includes eight years in the exhibition industry as Group Finance
Director and Halls Managing Director at the London exhibitions group, Earls
Court Olympia.
Dividend
The Board has approved an interim dividend of 0.5p per share. This will be
payable on 18th July 2003 to shareholders on the register as at 13th June 2003.
Results
Turnover for the first six months of the year was #18.8m (2002 #18.7m) and
Headline profit before tax and non-recurring items was #2.2m this year against a
comparable #0.9m last year (see note 7).
Turnover in the first six months included a strong performance from our core
events in Russia where revenues increased overall by 15% over last year's shows.
Against this, a number of shows which took place in the first half of 2002 were
not repeated this year. As anticipated, re-focusing on our core business has
helped to improve profitability with gross margins improving from 31% last year
to 36% this year. The rationalisation steps taken last year, together with the
absence of any further one-off costs have helped to reduce operating costs
before impairment, amortisation and exceptional items by #1.3m (from #6.4m to
#5.1m) over the first six months. The improvement in the quality of gross margin
together with lower overheads has contributed to an improved operating profit of
#0.7m (2002 operating loss after impairment, goodwill and exceptional items of
#6.4m).
Our associates have made a small contribution in the first six months. The
Turkish business has held up well considering the recent conflict in the region
and many of its events take place in the second half of the year. The organising
and hall owning business in the Czech Republic is however continuing to suffer
from the disruption caused by the flooding in Prague last August.
Profit before tax for the first six months was #1.2m (2002 Loss before tax
#7.3m). Net assets at 31st March were #36.5m (2002 #34.3m) and net cash balances
stood at #19.4m (2002 #15.7m).
Expenditure on 'acquisitions' in the six months was #1.9m and related to
deferred consideration payments due under previous acquisition agreements.
Events
During the period to 31 March 2003, ITE organised 69 events (2002 70 events).
The following events were the top ten contributors to interim profits:
Area (sq.m.) Area (sq.m.)
-------------- --------------
2002/2003 2001/2002
----------- -----------
Moscow International Travel and Tourism 17,400 15,000
Kazakhstan Oil & Gas 5,300 4,500
Ingredients Russia 4,500 2,650
Moda UK Spring 8,950 3,100
Moscow Sports, Boats and Leisure 7,500 5,950
Transrussia 3,700 3,400
International Textile Show (Autumn) - Turkey 12,500 11,350
International Textile Show (Spring) - Turkey 12,100 10,200
Moda Moscow Spring 4,200 3,000
Kievbuild 3,600 4,100
Overall growth in the shows set out above was 26% in terms of space sales and
23% in terms of revenue.
In Russia and the CIS our strong market position allied to good economic
conditions are supporting good growth across the sectors. The Moscow
International Travel and Tourism show held its 10th anniversary and was 16%
bigger this year than last year. Other Moscow shows have exhibited similar
growth.
The Kazakhstan Oil and Gas exhibition also celebrated its 10th anniversary and
was our second largest contributor in the interim period complimented by the
internationally recognised conference that accompanies it.
Moda UK has realised very strong growth in revenue and contribution following
its move to bigger exhibition halls. The brand is expanding from its base in
Women's fashion to include Menswear and Bridal sections - though the initial
growth rate cannot be expected to continue. The Moda brand in Moscow performed
well in the spring but is now facing new competition in the market.
The two international textile events in Turkey run by our associate have grown
to a significant size but do not command the yields of some of the Russian and
CIS exhibitions.
The core exhibitions for this year are continuing to trade strongly. April is
the most important month for the Group with our biggest event, Russia Building
Week, having taken place successfully. The two biennial events, Moscow Oil and
Gas and Autosalon both fall later on in this years' programme and the forward
sales outlook is favourable.
Outlook
ITE is well placed to deliver strong results for the full year with the
currently buoyant Russian and CIS markets underpinning the Group's future
prospects. The balance sheet remains strong with net cash balances of #19.4m.
Our business is well poised for further organic growth and we see prospects to
strengthen our business further in either the sectors or the markets where we
specialise. Further, opportunities lie in broadening our product portfolio
available to clients.
ITE is well positioned to meet the challenges of the future and benefit from its
strength as the leading exhibition organiser specialising in emerging markets.
Our market share in Russia and the CIS is advantageous in times when growth
prospects are lower in more established markets.
Ian Tomkins Iain Paterson
Chief Executive Officer Chairman
Consolidated Profit and Loss Account
Six months to Six months to Year ended 30
31 March 2003 31 March 2002 September 2002
Notes Unaudited Unaudited Audited
#000 #000 #000
Turnover 18,841 18,662 52,431
Cost of sales (12,062) (12,821) (31,012)
__________ __________ __________
Gross profit 6,779 5,841 21,419
--------- --------- ---------
Net operating (5,130) (6,396) (12,581)
expenses before
impairment and
goodwill
amortisation and
exceptional items
Impairment charge 3 - (3,939) (6,220)
Goodwill (909) (1,024) (1,905)
amortisation --------- --------- ---------
Exceptional loan - (864) -
write off
--------- --------- ---------
Total operating (6,039) (12,223) (20,706)
expenses
__________ __________ __________
Operating profit/ 740 (6,382) 713
(loss) --------- --------- ---------
Share of associates' 266 (1,445) (1,211)
operating profit/
(loss) before
goodwill
amortisation
Goodwill (81) (78) (160)
amortisation --------- --------- ---------
Share of associates' 185 (1,523) (1,371)
operating profit/
(loss)
Loss on disposal of - - (476)
interest in
subsidiary
__________ __________ __________
Profit/(loss) on 925 (7,905) (1,134)
ordinary activities
before interest
Interest 320 562 824
receivable
Interest payable (14) (2) (95)
__________ __________ __________
Profit/(loss) on 1,231 (7,345) (405)
ordinary activities
before taxation
Tax on profit/(loss) (535) (203) (2,350)
on ordinary
activities
__________ __________ __________
Profit/(loss) on 696 (7,548) (2,755)
ordinary activities
after taxation
Minority interests (59) (1) 152
__________ __________ __________
Profit/(loss) for 637 (7,549) (2,603)
the financial
period
Dividends (1,406) - (6,548)
__________ __________ __________
Retained loss (769) (7,549) (9,151)
============ ============ ============
Earnings/(loss) per
share
Basic and diluted 4 0.2p (3.0p) (1.0p)
Headline diluted 4 0.6p (1.0p) 2.2p
============ ============ ============
Consolidated Balance Sheet
31 March 2003 31 March 2002 30 September
2002
Notes Unaudited Unaudited Audited
#000 #000 #000
Fixed assets
Goodwill 30,166 31,904 30,826
Tangible assets 2,025 1,828 2,041
Associates 688 914 612
Other investments 2,537 2,492 2,492
___________ ___________ ___________
35,416 37,138 35,971
Current assets
Debtors due within one 5 18,333 16,464 18,225
year
Debtors due after one 5,875 4,591 4,148
year
Cash at bank and in 19,353 15,706 17,693
hand
___________ ___________ ___________
43,561 36,761 40,066
Creditors: amounts 5 (41,854) (37,615) (38,426)
falling due within one
year
___________ ___________ ___________
Net current assets/ 1,707 (854) 1,640
(liabilities)
___________ ___________ ___________
Total assets less 37,123 36,284 37,611
current liabilities
Creditors: amounts (53) (61) -
falling due after more
than one year
Provisions for (567) (1,879) (1,241)
liabilities and
charges
___________ ___________ ___________
Net assets 36,503 34,344 36,370
============= ============= =============
Capital and reserves
Called-up share 2,811 2,699 2,778
capital
Share premium 31,727 71,388 31,010
account
Option reserve 174 274 239
Profit and loss 1,729 (38,624) 2,340
account
___________ ___________ ___________
Equity shareholders' 36,441 35,737 36,367
funds
___________ ___________ ___________
Minority interests 62 (1,393) 3
___________ ___________ ___________
Total capital 36,503 34,344 36,370
employed
============= ============= =============
Consolidated Cash Flow Statement
Note Six months to Six months to Year ended 30
31 March 2003 31 March 2002 September 2002
Unaudited Unaudited Audited
#000 #000 #000
Net cash inflow from 6 9,222 4,596 10,393
operating
activities
Returns on 306 122 1,080
investments and
servicing of
finance
Taxation (1,404) (585) (2,300)
Capital expenditure (2,280) (55) (643)
and financial
investment
Acquisitions and (1,919) (4,774) (5,624)
disposals
Equity dividends (2,660) - (1,623)
paid
__________ __________ __________
Cash inflow/(outflow) 1,265 (696) 1,283
before management of
liquid resources and
financing
Management of liquid - - 2,300
resources
Financing 395 147 155
__________ __________ __________
Increase/(decrease) 1,660 (549) 3,738
in cash in the
period
============ ============ ============
Notes
1. The interim results have been prepared on the historical cost
basis, are unaudited and do not constitute statutory accounts within the meaning
of Section 240 of the Companies Act 1985. The interim results are prepared on
the basis of accounting policies set out in the annual financial statements of
the Group for the year ended 30 September 2002.
2. The results for the year ended 30 September 2002 have been extracted from
the statutory accounts, which have been reported on by the Group's auditors and
have been delivered to the Registrar of Companies. The auditors' report was
unqualified and did not contain any statement under section 237 (2) or (3) of
the Companies Act 1985.
3. In the six months to 31 March 2002, an impairment review resulted in a loss
of #3.9m, being a write down of #2.5m in the Group's investment in Intermedia, a
#1.0m impairment in relation to the Group's investment in EUF in Turkey and an
impairment of #0.4m against the Group's investment in Agentura Triumf in the
Czech Republic.
4. Basic, diluted and headline diluted earnings per share have been based on
the profit for the financial period divided by the weighted average of the
number of shares in issue being 269.8m for the basic earnings per share and the
diluted weighted average of the number of shares in issue being 273.0m for the
diluted and headline diluted earnings per share.
5. Debtors include trade debtors of #12.6m (31 March 2002: #9.8m; 30 September
2002: #13.8m) which represents amounts billed in advance.
Creditors: amounts falling due within one year include deferred income of #32.1m
(31 March 2002: #27.2m; 30 September 2002: #24.3m).
6. Reconciliation of operating profit/(loss) to operating cash flows
Six months to Six months to Year ended 30
31 March 2003 31 March 2002 September 2002
Unaudited Unaudited Audited
#000 #000 #000
Operating profit/(loss) 740 (6,382) 713
Depreciation charges 234 247 449
Amortisation 909 1,024 1,905
Impairment - 3,939 6,220
Loss/(profit) on sale of 40 (22) (69)
fixed assets
Increase in debtors (1,127) (1,351) (2,776)
Increase in creditors 8,426 7,141 3,951
__________ __________ __________
Net cash inflow from 9,222 4,596 10,393
operating activities
============ ============ ============
7. Headline profit before tax and non-recurring items is stated before
amortisation of goodwill, impairment charges and non-recurring items. In the
six months to 31st March 2002 non-recurring items comprised redundancy costs
of #0.6m, provision for rent and repairs of #0.5m and a provision against
irrecoverable loans of #2.1m.
8. Since the previous interim results for the period ended 31 March 2002, the
Group has adopted FRS 19, such that deferred taxation is recognised in
respect of all timing differences that have originated but not reversed at
the balance sheet date where transactions or events that result in an
obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are
differences between the company's taxable profits and its results as stated
in the financial statements that arise from the inclusion of gains and
losses in tax assessments in periods different from those in which they are
recognised in the financial statements. A net deferred tax asset is regarded
as recoverable and therefore recognised only when, on the basis of all
available evidence, it can be regarded as more likely than not that there
will be suitable taxable profits from which the future reversal of the
underlying timing differences can be deducted. Deferred tax is measured at
the average tax rates that are expected to apply in the periods in which the
timing differences are expected to reverse, based on tax rates and laws that
than been enacted or substantially enacted by the balance sheet date.
Deferred tax is measured on a non-discounted basis.
The adoption of FRS 19 has no effect on either the current periods results or
the prior periods results.
9. Copies of this document are being sent to shareholders. Further copies are
available from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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