Interim Results

19th May 2008 07:00



19 May 2008

ITE GROUP PLC

INTERIM RESULTS ANNOUNCEMENT

Organic growth reflects continued strength of Russian and CIS economies

	Six months ended 31 March 2008	Six months ended 31 March 2007	% Change
Turnover	£32.6m	£31.3m	4%
Operating profit*	£6.6m	£4.4m	50%
Headline pre-tax profit**	£4.7m	£5.5m	(14%)
Reported profit before tax	£3.9m	£4.7m	(17%)
Headline diluted earnings per share***	1.3p	1.5p	(13%)
Diluted earnings per share	1.1p	1.3p	(15%)
Dividend per share	1.6p	1.3p	23%

Good organic growth driven by quality of exhibition portfolio in core markets

Headline pre-tax profit of £4.7m achieved after a net foreign exchange charge of £2.8m

Acquisitions of SFITEX and Siberian Fairs strengthens the Group's position in core markets 

Strong balance sheet to support further investment in business

Interim dividend increase demonstrates confidence of Board 

£92.9m of revenue booked for the full year - 10%+ like for like increase over last year

Second half has started well - April events performing at least in line with expectations

Iain Paterson, Chairman of ITE Group, commented:

"ITE has performed well in the first half with our established events in our core markets showing good growth. ITE's expertise in its markets together with its local presence has ensured that we have been able to capitalise on continuing strength in the Russian and CIS economies.

 

Consistent with our strategy we have continued to seek acquisitions which are incremental to our core business, and in February we announced the acquisition of the SFITEX security event in St Petersburg. In addition we have developed our plans for the regional expansion of our business in Russia with the recently announced acquisition of Siberian Fairs in Novosibirsk, Siberia. This will provide us with an excellent platform for the anticipated growth of the exhibition business in Eastern Russia.

The trading pattern of the first half looks set to continue with ITE's events experiencing good demand from exhibitors. The benefit of the strong Euro on revenues in the second half is expected to cancel out the net cost incurred on foreign exchange in the first half, and the key Moscow events held since 31 March have performed at least in line with our expectations. Sales visibility remains good and the Board remains confident of the prospects for the 2008 financial year."

* Operating profit for 2007 has been restated for the presentation of financial instruments - see note 1 for details

*  Headline pre-tax profit is defined as profit before tax, amortisation of acquired intangibles and impairment of goodwill (including associates) and profits or losses arising on disposal of group undertakings 

**  Headline diluted earnings per share is calculated using profit before amortisation of acquired intangibles and impairment of goodwill (including associates) and profits or losses arising on disposal of group undertakings

Enquiries:

Russell Taylor Chief Executive Officer and Group Finance Director	ITE Group plc	020 7596 5000
Charles Palmer/Helen Thomas	Financial Dynamics	020 7831 3113

Interim management report

Overview

Over the first six months of this financial year ITE's business units have experienced continued good trading conditions in the Group's core markets of Russia and the CIS, and the Group's principal events have performed well. The trading environment in Russia and the CIS has not been notably affected by the conditions of the financial markets in Western Europe and the United States and demand for our exhibitions continues to reflect the growth of the underlying economies in which we operate. The financial results for the first six months reflect changes in the timing of some exhibitions and charges for 'mark to market' provisions against derivative instruments arising from the recent appreciation of the Euro against Sterling.

The reported revenue of £32.6m (2007: £31.3m) for the first six months represents a 9% improvement on the like for like result for the same period last year ('like for like' is adjusted for timing effects for events being held in different periods). Headline pre-tax profit of £4.7m (2007: £5.5m) is stated after a net £2.8m charge for foreign exchange (2007: £0.3m gain). This net cost, which largely relates to the recent strength of the Euro against Sterling, is expected to be matched by an equal benefit to revenues and profits over the full year. There are a number of events which have moved dates, notably the TransRussia transport event, which will be reported in the second half this year. Reported pre-tax profit for the six months was £3.9m (2007: £4.7m). 

The Group continues to implement its strategy of strengthening its position in core markets and industry sectors. In February 2008 the Group announced the acquisition of an annual security event in St Petersburg. Under ITE's ownership, this event will benefit from the Group's international marketing network. On 29 April 2008 the Group announced that it had acquired Siberian Fairs LLC which has a strong portfolio of exhibitions in Russia's third largest city, Novosibirsk. ITE's management has anticipated the growth of exhibitions in the regional cities of Russia for some time and the acquisition of Siberian Fairs LLC is the first step in ITE's ongoing regional expansion plan. ITE is presently working with parties who plan to build a new larger and purpose built exhibition facility in Novosibirsk for delivery by 2011. This, when completed, will provide opportunities for the future growth of the Siberian Fairs's portfolio of events.

In Central Asia ITE has advanced $1.5m to support the building of a new 6,000m2 exhibition facility in Atyrau, Kazakhstan. The facility which is planned to be completed in 2010 will facilitate the future development of ITE's exhibition business in Atyrau. 

The Board remains committed to returning surplus cash to shareholders via dividends and the buyback of shares. As at 31 March 2008 the Group's balance sheet recorded net assets of £39.5m (2007: £40.3m) and net cash balances of £42.3m (2007: £37.4m). The Board intends to return surplus free cash flow of the business after dividends to shareholders, through a rolling share buyback programme in the second half.

Board and Management

Following the unexpected departure of the Group's CEO, Bill Dye in January this year, the Group's Finance Director, Russell Taylor has been acting as Chief Executive Officer and together with Edward Strachan has been responsible for the execution of the Group's plans. The Nomination Committee has carried out an intensive search process and, following that process, has appointed Russell Taylor as the Group's CEO. A Group Finance Director will be appointed in due course but, in the meantime, Russell Taylor will continue to hold both functions.

Sir Jeremy Hanley retired from the Board after 10 years of duty at the Group's AGM in March. He was appointed when the Group first listed on the London Stock Exchange and the Board warmly thanks him for his contribution to the development of ITE Group plc over the last 10 years. Neil England has subsequently been appointed as a non-executive Director and brings to the Group extensive experience of sales and marketing in its core markets of Russia and the CIS regions.

Dividend 

The Board has approved an interim dividend of 1.6p per share (2007: 1.3p per share). The increase in the interim dividend reflects the Board's commitment to a progressive dividend policy and its confidence in ITE's trading prospects.

Financial Performance

Revenue for the first half increased 9% on a like for like basis compared to last year. The gross profit margin achieved over the first six months of 42% is an improvement over last year's comparable margin of 38%. This reflects the effect of the stronger Euro on revenues and the cessation of some less profitable events in ITE's portfolio. Operating profit of £6.6m (2007: £4.4m) is stated after administrative costs of £7.4m (2007: £7.7m) which include a foreign exchange gain of £0.7m (2007: £0.5m gain) and £0.8m of amortisation charges (2007: £0.8m).

 

At 1 October 2007 the Group held €47m of derivative financial instruments extending forward to 31 March 2009. The strength of the Euro against Sterling at 31 March 2008 (€1.26: £1) has required the Group to make 'mark to market' provisions against these financial instruments. At 31 March 2008 the Group had outstanding commitments to sell €29m over the next 12 months and carried a provision against these instruments of £3.1m. Group receipts of Euros are expected to be in excess of €29m over the same period. 

Finance income of £1.1m has increased over last year's figure of £0.9 million, due to higher average cash balances held over the first six months of the year. Finance costs of £3.9m (2007: £0.5m) for the first six months include £3.5m of charges relating to unhedged derivative instruments (2007: £0.2m). This includes the charges related to the £3.1m  'mark to market' provision carried against future derivative instruments.

Headline pre-tax profits of £4.7m (2007: £5.5m) reflect a good underlying trading performance from the business. The trading result stated before foreign exchange charges (which largely relates to future liabilities) was an improvement of more than 25% in both operating and pre-tax profit over the comparable period for last year.

Trading Highlights and Review of Operations

In the six months to 31 March 2008 ITE organised 67 events (2007: 62 events) including seven new launch events. Total square metres sold in the first half fell slightly from 163,100m2 last year to 161,100m2 this year, reflecting the Group's decision to withdraw from some marginal exhibitions and the effect of exhibitions changing dates between the first and second halves of the year. A summary analysis of the Group's sales and margins from its exhibitions business is set out below:

	Square Metres ‘000	Revenue £m	Gross Profit £m
First half 2007	163.1	30.4	11.7
Timing differences	(3.8)	(1.3)	(0.5)
Net organic growth	1.8	2.7	2.2
	_________	________	______
First half 2008	161.1	31.8	13.4
	__________	__________	__________

The Group's overall yield for the six month period is £197 per m² (£186 per m² for the same period last year). The change in yield largely reflects the effect of translating Euro denominated revenues at a more beneficial exchange rate.

Russia

Overall the Russian business achieved similar space sales to last year but produced higher yields, revenues and profits following the withdrawal from some marginal activity and concentration on the growth of its core events. The results include a strong performance from the Moscow International Travel event, which at 20,800m2 reported a 12% increase in space sales. The other principal event taking place in Russia over the first six months of the year, Ingredients Russia performed much as expected selling 5,600m2 (2007: 6,300m2), following a date clash this year with its biennial European competitor. In April TransRussia, which took place in March last year performed exceptionally well growing its space sales by over 30% following its move to larger facilities. The contribution from this event will be reported in the second half this year. There were other good performances from the smaller events in Moscow including the recent acquisition, Expoclean. 

Central Asia & the Caucasus

Over the first six months space sales in Central Asia and the Caucasus were 14% higher than for the same period last year on a like for like basis, with revenues and profits improving by more than 15%. As reported previously the Kazakhstan Oil and Gas event reported a 15% growth in space sales and a matching revenue growth from the related conference. The Group expanded its portfolio of oil and gas conferences with the launch of an oil and gas conference in Turkmenistan, which was a significant success generating revenue of £0.7m and hosting over 650 delegates. Other notable results from the Central Asia portfolio were the continuing strength of the construction events and ongoing growth from the food sector across the portfolio. WorldFood Kazakhstan recorded an increase in space sales of more than 15% and KazBuild Spring, now in its third year, achieved an increase of 13%. In Azerbaijan the main event in the first half was BakuBuild, which is venue constrained and managed a 5% growth in space over last year. The Group is still seeking to find a resolution to the venue issue in Baku which currently inhibits the development of the business in Azerbaijan.

Southern and Eastern Europe

Overall the Kyiv business reported space sales 8% higher than for the same period last year. The first quarter saw uncertain trading in the autumn events with Worldfood Ukraine and the Information Communication Technology event both reporting space sales marginally behind last year's results. After a change in management the second quarter results resumed the strong growth patterns of previous years. The two largest events in Kyiv both take place in February, and both continued to show good growth over previous editions. AgriHort, the agricultural event, increased its space sales by circa 20% to 19,100m2 and improved its yield simultaneously. ITE's construction event, KievBuild, improved space sales by over 30% to 10,400m2. The last event in the calendar for the first half was the Ukraine International Travel & Tourism event, which in Ukraine's 'year of tourism' was opened by President Yuschenko and increased its size by 10% to 6,700m2. 

In Turkey, the financial results for the first half were affected by the strength of the Turkish Lira against the US Dollar. Most events in Turkey are priced in US Dollars and as a result reported yields were under pressure for all events. Our 100% owned business, EUF, which held two events in the first half performed well in the circumstances. The ITF business which is 50% owned was also affected by the currency issue but through better control over costs reported improved financial results from a broadly similar trading performance as last year.

UK and Rest of the World

MODA, the fashion and footwear business, has found itself in adverse market conditions in the first half. Fashion is a cyclical exhibition business and ITE's business is performing well against a general downturn in the UK fashion retail trade. The MODA spring event was an unexpected success, with results in line with last year's event despite space sales being 6% lower than last year at 17,200m2. The event was well attended and there was real enthusiasm from visitors and exhibitors alike. The publishing business continued to struggle in the current market conditions. 

Outlook

ITE has completed its busy programme of April events in Moscow. As anticipated last year the construction event, MosBuild, had its growth suppressed this year by a date clash with a large German exhibition. Nonetheless the combined exhibitions of MosBuild and MosBuild+ grew from last year's 84,600m2 to 87,200m2 this year. The Moscow International Security event and TransRussia both benefited from a move to better and larger venue facilities, and grew to 7,600m2 (13% increase) and 8,200m2 (30% increase) respectively. The Moscow International Boat Show and Expoelectronica both recorded growth over last year in space sales and a more significant growth in their revenues. This pattern is repeated throughout the events held in April, which have all reported higher revenue growth than space sales, reflecting, inter alia, the effect of the stronger Euro on the Group's Sterling yields. 

The trading pattern of the first half looks set to continue with ITE's more important events experiencing good demand from exhibitors. The continuing strength of the Euro against Sterling will have an increasingly beneficial effect on sales yields for the rest of the financial year. At current exchange rates we anticipate that the gains in revenue and profits realised over the full year will at least match the net costs incurred on foreign exchange at 31 March 2008. In the longer term a continuing strong Euro will have an overall positive effect on the revenues and profits of ITE's portfolio of events.

At 12 May 2008 ITE had booked revenue of £92.9m for the full year (£85.8m this time last year). On a like for like basis this represents more than a 10% increase over the same period last year. The second half has started well with the key Moscow events held since 31 March 2008 performing at least in line with our expectations. Sales visibility remains good, and the Board remains confident of the prospects for the full year.

By the order of the board

Acting Chief Executive Officer & Group Finance Director

Russell Taylor

16 May 2008

Disclaimer

The interim management report has been prepared solely to provide additional information to shareholders as a body to assess the Company's strategies and the potential for those strategies to succeed. The interim management report should not be relied on by any other party or for any other purpose.

The interim report includes forward looking statements made by the directors in good faith based on the information available to us up to the time of approving the interim report. These statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward looking information.

Consolidated Income Statement

For the six months ended 31 March 2008

		Six months to 31 March 2008		Six months to 31 March 2007  Restated*		Year ended 30 September 2007 Restated*
		Unaudited		Unaudited		Audited
	Notes	£000		£000		£000
Continuing operations
Revenue		32,592		31,277		99,134
Cost of sales		(18,973)		(19,243)		(49,397)
		__________		__________		__________
Gross profit		13,619		12,034		49,737
Other operating income		141		123		253
Administrative expenses before amortisation		(6,586)		(6,933)		(15,599)
Amortisation of acquired intangibles		(777)		(794)		(1,603)
Total administrative expenses		(7,363)		(7,727)		(17,202)
Share of results of associate		248		(23)		266
		__________		__________		__________
Operating profit		6,645		4,407		33,054
Finance income	3	1,107		872		1,778
Finance costs	4	(3,866)		(538)		(1,096)
		__________		__________		__________
Profit on ordinary activities before taxation		3,886		4,741		33,736
Tax on profit on ordinary activities	6	(1,181)		(1,433)		(10,777)
		__________		__________		__________
Profit for the period		2,705		3,308		22,959
		__________		__________		__________
Attributable to:
Equity holders of the parent		2,705		3,327		22,978
Minority interests		-		(19)		(19)
		__________		__________		__________
		2,705		3,308		22,959
		__________		__________		__________
Earnings per share (p)
Basic	8	1.1		1.3		9.1
Diluted	8	1.1		1.3		9.0
		__________		__________		__________

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

* Restated for the presentation of financial instruments - see note 1 for details.

Consolidated Statement of Recognised Income and Expense

For the six months ended 31 March 2008

		Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
		Unaudited	Unaudited	Audited
		£000	£000	£000
Currency translation on net investment in subsidiary undertakings		253	(276)	(62)
(Loss)/gain on cash flow hedge		-	(18)	331
Tax on items taken directly to equity		-	-	1,921
		__________	__________	__________
Net income /(expense) recognised directly in equity		253	(294)	2,190
Transferred to profit or loss on cash flow hedges		(51)	(202)	(614)
Profit for the period attributable to the shareholders		2,705	3,308	22,959
		__________	__________	__________
Total recognised income and expense for the period		2,907	2,812	24,535
		__________	__________	__________
Attributable to:
Equity holders of the parent		2,907	2,831	24,554
Minority interests		-	(19)	(19)
		__________	__________	__________
		2,907	2,812	24,535
		__________	__________	__________

Consolidated Balance Sheet

31 March 2008

		31 March 2008	31 March 2007	30 September 2007
		Unaudited	Restated Unaudited	Restated Audited
	Notes	£000	£000	£000
Non-current assets
Goodwill		34,497	34,391	34,424
Other intangible assets		4,399	5,021	4,295
Property, plant & equipment		1,483	1,415	1,412
Investments in associates		1,570	1,446	1,358
Venue advances and other loans		1,564	2,588	1,583
Deferred tax asset		1,399	2,323	1,690
Derivative financial instruments	12	-	-	48
		___________	___________	___________
		44,912	47,184	44,810
Current assets
Trade and other receivables	9	33,549	26,890	37,324
Derivative financial instruments	12	-	104	-
Cash and cash equivalents		43,991	43,656	39,963
		___________	___________	___________
		77,540	70,650	77,287
Total assets		122,452	117,834	122,097
Current liabilities
Bank overdraft	11	(1,722)	(6,237)	(13,306)
Trade and other payables	9	(75,360)	(66,513)	(59,483)
Derivative financial instruments	12	(3,147)	(86)	(610)
Provisions		(550)	(1,025)	(824)
		___________	___________	___________
		(80,779)	(73,861)	(74,223)
Non-current liabilities
Provisions		(674)	(1,284)	(754)
Deferred tax liabilities		(1,464)	(2,215)	(1,671)
Derivative financial instruments	12	-	(140)	(49)
		___________	___________	___________
		(2,138)	(3,639)	(2,474)
Total liabilities		(82,917)	(77,500)	(76,697)
		___________	___________	___________
Net assets		39,535	40,334	45,400
		___________	___________	___________
Equity
Share capital	13	2,527	2,609	2,503
Share premium account		2,108	727	871
Merger reserve		2,746	2,746	2,746
Capital redemption reserve		403	291	403
ESOT reserve		(2,829)	(1,658)	(597)
Retained earnings		33,834	38,795	38,930
Own shares held		-	(3,566)	-
Hedge and translation reserve		746	390	544
		___________	___________	___________
Total equity		39,535	40,334	45,400
		___________	___________	___________

Consolidated Cash Flow Statement 

For the six months ended 31 March 2008

		Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
		Unaudited	Restated Unaudited	Restated Audited
		£000	£000	£000
Cash flows from operating activities
Operating profit from continuing operations		6,645	4,407	33,054
Adjustments for:
Depreciation and amortisation		1,079	1,065	2,159
Share-based payments		425	591	1,550
Other non-cash expenses		(860)	791	47
Loss/(profit) on sale of fixed asset		6	-	(39)
Share of associate (profit)/loss		(248)	23	(266)
(Decrease)/Increase in provisions		(440)	202	(1,072)
		__________	__________	__________
Operating cash flows before movements in working capital		6,607	7,079	35,433
Decrease/(increase) in receivables		6,017	2,819	(1,480)
Increase in payables		15,837	14,457	7,565
		__________	__________	__________
Cash generated from operations		28,461	24,355	41,518
Tax paid		(1,435)	(3,294)	(10,324)
Venue advances and loans		(740)	(728)	(929)
		__________	__________	__________
Net cash from operating activities		26,286	20,333	30,265
Investing activities
Interest received		1,107	872	1,752
Derivative financial instruments		(993)	-	-
Dividends received from associates		-	-	444
Acquisition of business		(680)	(84)	(359)
Exercise of Moda Put option		-	-	(1,030)
Purchase of property, plant & equipment and computer software		(548)	(342)	(783)
Disposal of property, plant and equipment		-	-	142
		__________	__________	__________
Net cash (used in) / from investing activities		(1,114)	446	166
Financing activities
Dividends paid		(7,967)	(6,316)	(9,634)
Interest paid		(387)	(312)	(663)
Net cash flow in relation to ESOT shares		(2,129)	1,811	2,623
Purchase of own shares		-	-	(17,506)
Proceeds from issue of share capital		1,243	11	144
		__________	__________	__________
Net cash flows from financing activities		(9,240)	(4,806)	(25,036)
Net increase in cash and cash equivalents		15,932	15,973	5,395
Net cash and cash equivalents at beginning of period		26,657	21,166	21,166
Effect of foreign exchange rates		(320)	280	96
		__________	__________	__________
Net cash and cash equivalents at end of period		42,269	37,419	26,657
		__________	__________	__________

		31 March 2008	31 March 2007	30 September 2007
		Unaudited	Unaudited	Audited
		£000	£000	£000
Comprised of:
Cash and cash equivalents		43,991	43,656	39,963
Bank overdrafts		(1,722)	(6,237)	(13,306)
		__________	__________	__________
		42,269	37,419	26,657
		__________	__________	__________

Notes to the Interim Financial Statements

1. Basis of preparation

The condensed consolidated interim financial statements are the results for the six months ended 31 March 2008. The condensed consolidated interim financial statements ("interim financial statements") have been prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union, in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the Disclosure and Transparency Rules of the Financial Services Authority. 

The interim financial statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985 as they do not include all of the information required for full statutory accounts. The interim financial statements should be read in conjunction with the statutory accounts for the year ended 30 September 2007, which were prepared in accordance with IFRS as adopted by the European Union and have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.

Accounting policies

The interim financial statements have been prepared on the basis of the accounting policies and methods of computation applicable for the year ending 30 September 2008. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2007 except for the changes in accounting policy described below. 

Change in accounting policies

IFRS 7 "Financial instruments: Disclosures"

In the current financial year, the Group will adopt IFRS 7 "Financial instruments: Disclosures" for the first time. As IFRS 7 is a disclosure standard, there is no impact of this change in accounting policy on the interim financial statements.

Gains and losses on derivatives not in designated and effective hedging relationships

During the 2007/2008 financial year, ITE Group plc has changed its accounting policy in relation to the income statement disclosure of fair value gains and losses on derivatives not in designated and effective hedging relationships. Previously, ITE Group plc reported these fair value gains and losses in "Administrative expenses" in the income statement. As a result of the change in policy, these fair value gains and losses are now disclosed as part of "Finance income/costs". Management judges that this policy provides a fairer presentation of administrative expenses and a clearer presentation of derivatives in the financial statements. The comparative interim financial statements for 2007 and the comparative prior year end financial statements for 2007 have been restated. The effects of these changes on the comparative figures are:

31 March 2007: Increase in "Finance costs" of £0.2 million and a resulting decrease in "Administration expenses". 

30 September 2007: Increase in "Finance costs" of £0.4 million and a resulting decrease in "Administration expenses".

Presentation of derivative financial instruments in the balance sheet

In light of the change of accounting policy above and the movement in the value of derivative instruments in the period, the Group has also amended the balance sheet presentation of derivative financial instruments. Previously, the fair value of derivatives was shown in "Other debtors/other creditors", but is now presented as a separate balance sheet caption on the face of the balance sheet. Management believes that this presentation provides a clearer picture of the derivative instruments used by the Group. This presentational change has resulted in a restatement of the comparative interim financial statements for 2007 and the comparative prior year end financial statements for 2007. The effect of these changes on the comparative figures are:

31 March 2007: Decrease in "Other debtors" of £0.1 million and a decrease in "Other creditors" of £0.2 million and a resulting increase in "Derivative finance instruments". 

30 September 2007: Decrease in "Other creditors" of £0.7 million and a resulting increase in "Derivative finance instruments". 

2. Segmental information

The turnover 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.

Six months ended 31 March 2008 Unaudited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Turnover	3,801	10,700	10,770	6,986	335	32,592
Result	(4,129)	4,999	2,898	2,918	(289)	6,397
	________	________	________	________	________	_______
By origin of sale
Turnover	20,552	4,094	4,645	3,172	129	32,592
Result	4,988	592	195	601	21	6,397
	_______	________	________	_______	________
Share of results of associates						248
						_______
Operating profit						6,645
Finance income						1,107
Finance costs						(3,866)
						_______
Profit before tax						3,886
Tax						(1,181)
						_______
Profit after tax						2,705
						________
Capital expenditure	308	51	186	3	-	548
Depreciation and amortisation	877	59	136	7	-	1,079
Balance Sheet
Assets	83,704	6,968	27,188	2,972	50	120,882
	_______	_______	_______	_______	_______
Investment in associates						1,570
						_______
Consolidated total assets						122,452
						________
Liabilities	(48,596)	(5,134)	(26,785)	(2,346)	(56)	(82,917)
	________	________	________	________	________	_______

Six months ended 31 March 2007 - Restated Unaudited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Turnover	3,924	8,092	11,788	6,227	1,246	31,277
Result	(4,057)	3,267	2,501	2,610	109	4,430
	________	________	________	________	________	_______
By origin of sale
Turnover	18,088	3,061	7,001	2,748	379	31,277
Result	4,318	449	(1,072)	640	95	4,430
	_______	________	________	_______	________
Share of results of associates						(23)
						_______
Operating profit						4,407
Finance income						872
Finance costs						(538)
						_______
Profit before tax						4,741
Tax						(1,433)
						_______
Profit after tax						3,308
						________
Capital expenditure	77	81	189	(5)	-	342
Depreciation and amortisation	924	31	105	5	-	1,065
Balance Sheet
Assets	83,050	5,364	26,526	1,428	20	116,388
	________	________	________	________	________
Investment in associates						1,446
						_______
Consolidated total assets						117,834
						________
Liabilities	(48,133)	(4,257)	(24,276)	(767)	(67)	(77,500)
	________	________	________	________	________	_______

Year ended 30 September 2007 - Restated Audited	UK & Western Europe	Central Asia & Caucasus	Russia	Eastern & Southern Europe	Rest of World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Turnover	10,624	18,082	61,706	7,069	1,653	99,134
Result	(6,672)	6,060	31,003	2,445	(48)	32,788
	________	________	________	________	________	_______
By origin of sale
Turnover	51,290	8,928	34,492	3,972	452	99,134
Result	18,788	2,191	12,037	(304)	76	32,788
	_______	________	________	_______	________
Share of results of associates						266
						_______
Operating profit						33,054
Finance income						1,778
Finance costs						(1,096)
						_______
Profit before tax						33,736
Tax						(10,777)
						_______
Profit after tax						22,959
						________
Capital expenditure	255	154	361	13	-	783
Depreciation and amortisation	1,839	68	212	40	-	2,159
Balance Sheet
Assets	95,335	6,137	17,910	1,389	(32)	120,739
	________	________	________	________	________
Investment in associates						1,358
						_______
Consolidated total assets						122,097
						________
Liabilities	(53,299)	(4,798)	(17,180)	(1,333)	(87)	(76,697)
	________	________	________	________	________	_______

3. Finance income

	Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
	Unaudited	Unaudited	Audited
	£000	£000	£000
Interest receivable from bank deposits	1,100	830	1,720
Interest receivable from Inland revenue repayments	-	28	28
Interest receivable on advances to venues	7	11	4
Unwind of fair value discount on venue advances	-	3	26
	__________	__________	__________
	1,107	872	1,778
	__________	__________	__________

4. Finance cost

	Six months to 31 March 2008	Six months to 31 March 2007 Restated	Year ended 30 September 2007 Restated
	Unaudited	Unaudited	Audited
	£000	£000	£000
Interest on bank loans and overdrafts	302	231	453
Bank charges	85	81	210
Loss on derivative financial instruments	3,479	226	433
	__________	__________	__________
	3,866	538	1,096
	__________	__________	__________

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

	Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
	Unaudited	Unaudited	Audited
	£000	£000	£000
Profit on ordinary activities before taxation	3,886	4,741	33,736
Amortisation of acquired intangibles	777	794	1,603
	__________	__________	__________
Headline pre-tax profit	4,663	5,535	35,339
	__________	__________	__________

6. Taxation

	Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax
UK corporation tax	585	1,002	4,897
Foreign tax	512	646	6,026
	__________	__________	__________
	1,097	1,648	10,923
Deferred tax	84	(215)	(146)
	__________	__________	__________
Tax on profit on ordinary activities	1,181	1,433	10,777
	__________	__________	__________

Tax at the interim is charged at 30% (2007: 30%) representing the best estimate of the weighted average annual corporation tax expected for the financial year.

7. Dividends

	Six months to 31 March 2008	Six months to 31 March 2007	Year ended 30 September 2007
	Unaudited	Unaudited	Audited
	£000	£000	£000
Final dividend for the year ended 30 September 2007 of 3.2p
(2006:2.5p) per ordinary share	8,045	6,331	6,331
	__________	__________	__________
Interim dividend for the year ended 30 September 2007 of 1.3p
per ordinary share			3,303
			__________
Proposed interim dividend for the year ended 30 September
2008 of 1.6p (2007:1.3p)	3,995	3,312
	__________	__________

The proposed interim dividend was approved by the board on 14 May 2008 and has not been included as a liability as at 31 March 2008.

8. Earnings per share

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

	Headline diluted			Basic and diluted
	Six months  to 31 March Unaudited	Six months  to 31 March Unaudited	Year ended 30 September Audited	Six months  to 31 March Unaudited	Six months  to 31 March Unaudited	Year ended 30 September Audited
	2008	2007	2007	2008	2007	2007
	£000	£000	£000	£000	£000	£000
Profit for the financial period	2,705	3,327	22,978	2,705	3,327	22,978
Amortisation of acquired intangibles	777	794	1,603	-	-	-
Tax effect of amortisation	(214)	(157)	(419)	-	-	-
	________	________	________	______	________	________
	3,268	3,964	24,162	2,705	3,327	22,978
	________	________	________	______	________	________

				Six months to 31  March 2008	Six months to 31 March 2007	Year ended 30 September 2007
				Number of shares ('000)	Number of shares ('000)		Number of shares ('000)
Weighted average number of shares:
For basic earnings per share				249,914	253,505	251,276
Dilutive effect of exercise of share options				2,552	7,382	4,454
				___________	___________	___________
For diluted earnings per share				252,466	260,887	255,730
			___________		___________	___________

Headline diluted earnings per share is intended to provide a consistent measure of group earnings on a year on year basis. Headline diluted earnings per share is calculated using profit for the financial year before amortisation and impairment of goodwill and profits or losses arising on disposal of group undertakings.

9. Current assets and current liabilities 

Trade and other receivables include trade debtors of £16.9m (31 March 2007: £14.9m; 30 September 2007: £26.8m) and venue advances and other loans of £2.0m (31 March 2007: £2.6m; 30 September 2007: £2.0m).

During the period, £3.8m held in a trust account as a result of the capital reduction in July 2005, was released leaving £81,000 held in trust. 

Trade and other payables include deferred income of £65.7m (31 March 2007: £55.8m; 30 September 2007: £46.2m).

 10. Acquisition of business

On the 29 February 2008 the Group completed the acquisition for a cash consideration of Roubles 30 million (£0.6m) of a small fire and protection event in St Petersburg, Sfitex. This event is complementary to the Moscow International Protection and Security event already owned by ITE and strengthens the Group's portfolio in this growing sector. The event will next be held in October 2008 and no revenues or profits have been recognised in the condensed consolidated income statement for the six months to March 2008. If the acquisition had taken place at the beginning of the financial year, it is estimated that Group revenues for the period would have been $0.9m higher and the Group profit before tax would have been $0.3m higher.

11. Bank overdraft

The bank overdraft is repayable on demand. 100% of the borrowing is denominated in US Dollars. The borrowings are arranged at floating interest rates, thus exposing the Group to cash flow interest risk. The overdraft is taken out to act as a partial hedge against the UK trade receivables in US Dollars.

12. Foreign currency derivatives

The Group utilises foreign currency derivatives to hedge significant future transactions and cash flows. The Group is party to foreign currency forward-plus contracts in the management of its exchange rate exposures. The instruments purchased are denominated in Euros which represents the Group's primary billing currency.

Under the forward-plus contract, the Group has a right but not an obligation, to sell Euros for Sterling at a specified rate range at specified dates. However, if the spot rate is at or below the specified barrier rate on any business day during the barrier period the right to sell Euros becomes an obligation, at the specified strike rate. As at 31 March 2008, the spot rate was below the barrier rate for all of the instruments.

As at 31 March 2008 the notional amounts of outstanding foreign currency forward-plus contracts that the Group has committed to are as follows:

	Six months to 31 March 2008 Unaudited	Six months to 31 March 2007 Unaudited	Year ended 30 September 2007 Audited
	€000	€000	€000
Foreign currency forward-plus contracts	29,000	18,000	41,000
	__________	__________	__________

These arrangements cover exchange exposures over the next 12 months, with €11 million covering exposures after September 2008. These instrument have either not been designated as hedging instruments, or are inefficient hedge instruments and, as such, any changes in its fair value are being recorded in the income statement. 

At 31 March 2008, the fair value of these derivatives is estimated to be a liability of approximately £3.1 million (31 March 2007: asset of £0.1 million and liability of £0.2 million; 30 September 2007: liability of £0.7 million). This is based on market valuations. There are no amounts deferred in equity at 31 March 2008 for these instruments.

13. Share capital

	Six months to 31 March 2008 Unaudited	Six months to 31 March 2007 Unaudited	Year ended 30 September 2007  Audited
	£000	£000	£000
Authorised
375,000,000 ordinary shares of 1 penny each (31 March 2007: 375,000,000)	3,750	3,750	3,750
	__________	__________	__________
Allotted and fully-paid
252,689,987 ordinary shares of 1 penny each (31 March 2007: 260,931,821)	2,527	2,609	2,503
	__________	__________	__________

During the period, the Company allotted 2,365,646 ordinary shares of 1 penny each pursuant to the exercise of share options. 10,347 ordinary shares were issued in respect of Director's remuneration. The total consideration for the shares issued was £1,260,604. 

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

14. Events after the balance sheet date

On the 29 April 2008 the Group announced the acquisition for a total cash consideration of $12.1 m of 100% of the issued share capital of Siberian Fairs LLC, an exhibitions business based in Siberia. The acquisition further strengthens ITE's core activities in the growing markets of Russia and the CIS and is highly complementary to the sector profile of the Group's exhibition portfolio. 

Siberian Fairs LLC is based in Novosibirsk, Siberia and owns a comprehensive portfolio of 30 exhibitions servicing business requirements of the Novosibirsk region. The largest exhibitions are in Construction, Furniture & Interiors, Motor, Food Products & Packaging and Agriculture. The business has around 160 employees and in 2007 it generated revenue of approximately US$10m and profit before tax of approximately US$3.5 million. Gross assets of approximately US$1m were acquired as part of the transaction.

15. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2008. Transactions between the Group and its associates, where relevant, are disclosed below. 

Trading transactionsCeyda Erem, a former director of ITE Group plc, has a controlling interest in CNR, a company that manages the largest exhibition halls in Istanbul. During the six months to 31 March 2008, ITF, the Group's associate, was charged £1.9 million by CNR for rent, hall services such as electricity, security and advertising and stand construction (2007: £2.4 million). At 31 March 2008, CNR owed ITF £0.5 million (31 March 2007: £1.4 million; 30 September 2007: £1.1 million).

In Kazakhstan, ITECA, a Group subsidiary, has transacted with Datacom and Saban Holdings for the provision of web systems and office rental respectively. Edward Strachan, a Group Director, is a significant shareholder of Datacom and Saban Holdings. In total, the services charged to ITECA were £39,000 (31 March 2007: £22,000; 30 September 2007: £57,000).

In St Petersburg, Primexpo, a Group subsidiary, has transacted with Cavalry House for the provision of office rental. Edward Strachan, a Group Director, is a significant shareholder of Cavalry House. In total, the services charged to Primexpo were £88,000 (31 March 2007: £68,000; 30 September 2007: £114,000).

16. Principal risks and uncertainties

The Group identifies and monitors the key risks and uncertainties affecting the Group and runs the business in a way that minimises the impact of such risks where possible. There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. These risks are detailed below and in our most recent annual report. 

Political uncertainty and regulatory risk

The Group's business is principally carried out in Russia and the CIS. Changes in law or the regulatory environment could have an effect on some or all of the exhibitions of the Group. ITE has reduced the risk by establishing its business as independent Russian and CIS companies fully contributing to the local economy.

Commercial relationships

The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future. These key relationships are regularly reviewed and the Group seeks to maintain its exhibition rights for at least three years forward for significant exhibitions.

Venue availability

Damage or unavailability of a particular venue could impact the Group's short-term trading position. Accordingly, the Group carries business interruption insurance policies which protect profits of its major events against such an occurrence in the short term.

Competitor risk

Competition has existed in ITE's markets for some years. ITE faces competitive pressures on a market-by-market basis. 

People

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

Financial risk

The Group also faces financial risks; the key risk being foreign currency risk. The Group is exposed to movements in foreign exchange rates against Sterling for both trading transactions and for the translation of net assets and the profits and loss accounts of overseas operations. The principal exposure is to the Euro and Dollar exchange rates, which form the basis of invoicing for our international customers. 

The bulk of the Group's business is in emerging and developing markets and to minimise the currency risk, the Group prices predominantly in Euros and US Dollars. A proportion of total invoicing amount is settled in local currency equivalent, translated at prevailing rates at the date of settling invoices. The Group uses derivative instruments and currency borrowings to protect itself against the effect of currency fluctuations on forward sales and its balance sheet. 

Responsibility statement

We confirm that to the best of our knowledge:

 

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

 

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (Indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By the order of the board

Acting Chief Executive Officer & Group Finance Director

Russell Taylor

16 May 2008

Independent Review Report to ITE Group plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 which comprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte & Touche LLP

Chartered Accountants and Registered Auditor

16 May 2008

London, UK

Directors and professional advisers

Directors	Iain Paterson, non-executive Chairman Russell Taylor, Acting CEO & Group Finance Director Michael Hartley, non-executive Director Edward Strachan, executive Director Malcolm Wall, non-executive Director Neil England, non-executive Director
Company Secretary	Russell Taylor
Registered office	ITE Group Plc 105 Salusbury Road London, NW6 6RG
Registration number	1927339
Auditors	Deloitte & Touche LLP 2 New Street Square London,  EC4A 3BZ
Solicitors	Olswang 90 High Holborn London, WC1V 6XX
Principal Bankers	Barclays 27 Soho Square London, W1A 4WA
Company Brokers	Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London, EC4M 7LT
Registrars	Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire, HD8 0LA
Public Relations	Financial Dynamics Holborn Gate 26 Southampton Buildings London, WC2A 1PB
Website	www.ite-exhibitions.com

Financial calendar

Interim dividend

Record date 30 May 2008

Payment date 20 June 2008

Final dividend

Record date February 2009

Payment date March 2009

ENDIR GUUQWAUPRGQM

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