21st May 2007 07:01
ITE Group PLC21 May 2007 21 May 2007 ITE GROUP PLC INTERIM RESULTS ANNOUNCEMENT Highlights Six months ended Six months ended % Change 31 March 2007 31 March 2006 Revenue £31.3m £26.2m 19% Headline pre-tax profit* £5.5m £3.7m 48% Reported Profit before tax 4.8m 3.0m 60% Headline diluted earnings per share* 1.5p 1.0p 50% Diluted earnings per share 1.3p 0.8p 64% Dividend per share 1.3p 1.0p 30% • Impressive growth in sales and headline profits reflects strong demand in core markets • Like for like Revenue up 14% • Like for like Headline profit before tax up 30% • New ten year venue agreement in Kazakhstan to 2017 • Rolling on-market share buyback programme from free cashflow • Interim dividend up 30% to 1.3p reflecting prospects and surplus cash • Board are confident of prospects for the full year • Forward sales for full year 2007 up 15%+ on a like for like basis Commenting on the results, Iain Paterson, Chairman, said: "The Group has delivered a strong financial and operating performance. Theresults reflect our ability to leverage our market leading positions in Russiaand the CIS where our exhibitions have enjoyed significant growth. We have builta strong presence in our core markets. We expect to continue to grow ourbusiness against a background of robust domestic economies, expanding venuespace and strong demand for exhibitions. The second half year has commencedahead of expectations and the Board remains positive and confident of theprospects for the 2007 financial year." * Headline pre-tax profit is defined as profit before tax, amortisation ofintangible assets arising on business combinations and impairment of goodwilland intangible assets and profits or losses arising on disposal of groupundertakings - see the Income Statement for details Headline diluted earnings per share is calculated using profit beforeamortisation of intangible assets arising on business combinations andimpairment of goodwill and intangible assets and profits or losses arising ondisposal of group undertakings. Enquiries:Ian Tomkins ITE Group plc 020 7596 5000Charles Palmer/Tim Spratt Financial Dynamics 020 7831 3113 ITE Group plc Interim Statement for six months ended 31 March 2007 OverviewITE's results for the first six months of the financial year reflect strongtrading conditions in the Group's core markets of Russia and the CIS. Revenueof £31.3m is 19% ahead of the same period last year and headline pre-tax profitof £5.5m is 48% ahead of last year's headline pre-tax profit of £3.7m. Thisyear's first half results have been skewed by the Ukraine International Travel &Tourism event taking place in March instead of April. After adjusting for thisand for acquisitions, the Group reported like for like revenue growth of 14% anda like for like 30% improvement in headline pre-tax profit for the first half.Reported pre-tax profit for the six months was £4.7m (2006: £3.0m). The trading environment in Russia and the CIS continues to be resoundinglybuoyant and most of ITE's major exhibitions have enjoyed strong growth. Thebusiness in Central Asia and Caucasus has performed particularly well in thefirst six months of the year and the Moscow exhibition business, which is secondhalf weighted, has now completed its busy April calendar with results thatsuggest the full year result for Moscow will exceed our original expectations. The Group has continued to focus efforts on the organic growth and developmentof ITE's business in its core markets. ITE has recently announced that it hassigned a new 10 year agreement with Atakent (Almaty, Kazakhstan) extending itsvenue exclusivity rights and agreeing tenancy rates until the end of 2017.Additionally, ITE has financially assisted further expansion of the exhibitionfacilities at Atakent, by making an additional prepayment of US$1.5m to supportthe construction of a new pavilion at the venue. The Group's strategy includes the acquisition of appropriate bolt-on events tosupplement the strong organic growth of the existing business. However ifappropriate opportunities are not available then the Board remains committed toreturning surplus cash to shareholders via dividends and the buyback of shares.As at 31 March 2007 the Group's balance sheet recorded net assets of £40.3m(2006: £30.1m) and net cash balances of £37.4m (2006: £14.9m). Given thecontinued strength of the Group's balance sheet it is the Board's intention, topursue a rolling share buyback programme financed by the free cash flow of thebusiness after dividends, and within the limits already approved byshareholders. ITE acquired 1.5m shares at £1.60 each on 30 March, which havesince been cancelled. Board and Management Further to the announcement that Ian Tomkins wishes to step down by the end of2007, the Nomination Committee has been working closely with a recruitmentconsultant. The process of selecting a new Chief Executive for the Group is welladvanced. Dividend The Board has approved an interim dividend of 1.3p per share (2006: 1.0p pershare). The increase in the interim dividend reflects both the Board'sconfidence in ITE's trading prospects and the high level of cash balances heldby the Group at 31 March 2007. Financial Performance Revenue for the first half increased 14% on a like for like basis compared tolast year. Gross profit margins achieved over the first six months of 38% are consistentwith last year's gross profit margins for the same period. Operating profits of £4.2m (2006: £2.6m) are stated after administrative costsof £8.0m (2006: £7.4m) which include a £0.8m charge for amortisation ofintangible assets (2006: £0.7m). Costs associated with the re-location of theMoscow office to larger premises had a small impact on the administrative costsfor the first six months. Net administrative costs for the first six monthsinclude £0.3m of foreign exchange gains (2006: £0.1m foreign exchange gain). Finance income of £0.9m reflects higher average cash balances and risinginterest rates. Last year's comparable figure of £0.6m included £0.2m of fairvalue adjustments. Headline pre-tax profits for the first half were up 48% to £5.5m (2006: £3.7m),which on a like for like basis represents a 30% improvement in headline pre-taxprofit. Trading Highlights and Review of Operations In the six months to 31 March 2007 ITE organised 62 events (2006: 52 events)including six new launch events. Total square metres sold were 163,100m(2)(2006: 123,100m(2)). A summary analysis of the Group's sales and margins fromits exhibitions business is set out below: Square Gross Metres Revenue Profit '000 £m £m First half 2006 123.1 25.3 9.6Timing differences 9.9 1.3 0.6Acquisitions 2.3 0.4 0.1Net organic growth 27.8 3.4 1.4 _____ ____ ____First half 2007 163.1 30.4 11.7 _____ ____ ____ The Group's overall yield for the six month period is £186 per m(2) (£206 per m(2) for the same period last year). This change is largely attributable to theimpact of growth in the low yielding AgriHort event in Ukraine, though thedecline in the $US also had an impact on both revenue and direct costs inCentral Asia. In the full year the impact of the weaker $US will be less, giventhe predominance of Euro priced business in the second half. Russia ITE's Russian business continues to experience strong demand, particularly inMoscow. For the first half of the year space sales were 9% ahead of last year'sperformance and yields 1% higher. The principal events taking place in Russiaover the first six months of the year all performed in line with expectations.Ingredients Russia and TransRussia both delivered space sales growth of circa10% over last year's events. The Moscow International Travel and Tourism eventperformed well despite competition and delivered an improvement in yield of 5%which covered a reduction in space sales of 4%. Other notable successes werethe integration of Expoclean which was acquired in June 2006, and the successfulre-location of Pharmtech to an alternative venue. Central Asia & the Caucasus Over the first six months space sales in Central Asia and the Caucasus were 33%higher than for the same period last year. Yields were a net 4% lowerreflecting the effect of a weaker $US in which prices for this region arenormally based. The Kazakhstan Oil and Gas exhibition was released from space constraints andgrew into the new pavilion 10, the construction of which was funded by ITE. Itincreased its space sales by 20% to 9,600m(2) (2005: 7,900m(2)) and theconference also enjoyed a 10%+ increase in revenues. The portfolio of events inCentral Asia and the Caucasus reported good growth across all sectors.Specifically, Kazbuild Spring consolidated its strong launch and grew by 20%,reflecting the continuing strength of the construction industry in Central Asia.World Food Kazakhstan grew by over 40% but notably more than doubled its profit,reflecting the incremental profitability of events once they achieve criticalmass. Other strong performances were BakuBuild and BakuTel in Azerbaijan andUzbuild in Uzbekistan which from a modest base all delivered growth in excess of30% over last year's comparable events. Southern and Eastern Europe The Kyiv business reported space sales 70% higher than for the same period lastyear. The two main influences were the significant growth of its AgriHort eventand a change in dates of the travel event, Ukraine International Travel andTourism, which brought it into the first half of the year. Ukraine InternationalTravel and Tourism performed well and delivered growth of 10% over last year.AgriHort grew into the new 3rd pavilion at IEC with space sales of over 16,000m(2) (2006: 9,500m2). Public Health which was acquired in 2004 delivered spacesales 23% up on the prior year performance. On a like for like basis space salesfor the Ukraine business were 39% improved over last year, but the low yields ofthe AgriHort event led to a reduction on a comparable basis of 24% in averageyields. The wholly owned business in Istanbul, Turkey recorded satisfying growth involumes and yields from a low base. However the performance of our associatecompany in Turkey, ITF, has been disappointing. The result for the first halfis a small improvement on last year's result but this is not expected to bemaintained over the full year. UK and Rest of the World The Spring MODA Fashion and Footwear exhibition held in February 2007 grew inspace terms over last year's equivalent event by 3% though revenues wereunchanged. The growth was mostly in the Footwear sector which is benefitingfrom its inclusion in the MODA portfolio. The Publishing business deliveredresults marginally behind last year, which was in line with our expectations andrealistically reflects the difficult market conditions. ITE's partnership with Sonatrach in Algeria delivered a successful Oil and Gasexhibition and conference in Oran. Further initiatives in Algeria are inprogress. Outlook Since 31 March 2007 the Group has organised several of its most importantexhibitions for the full financial year. In April ITE's flagship eventsMosbuild and Mosbuild+ sold 85,000m(2) (2006: 68,300m(2)) representing overallgrowth of circa 25%. Most of the growth was in the Mosbuild+ event at Crocuswhich also improved its yield. At Expocentr a newly constructed pavilion wascompleted earlier than originally scheduled and released space constraints onthe Mosbuild event. The Moscow International Boat Show successfully re-locatedto another venue and grew to 8,700m2 (2006: 7,900m2). Moscow InternationalProtection and Security grew by 10% to 6,700m2 and having reached capacity atits venue is re-locating next year. Expoelectronica consolidated last year'sre-location and improved its yield and profitability. Looking ahead the availability of extra space at Expocentr has improved theprospects for sales of Moscow International Oil and Gas (June 2007) and WorldFood Moscow which is due to take place in September this year. Russia, Central Asia and the Caucasus and Ukraine are enjoying robust growth inall sectors of their economies. The exhibition industry in the Group's keymarkets is set for further growth based upon continuing good prospects for thedomestic economies, expanding venue space and strong demand for exhibitions. At 11 May 2007 ITE has booked revenue of £85.8m for the full year. Thisrepresents a 15%+ increase on a like for like basis over the same period lastyear. The second half has started well with the Moscow events held since 31March performing ahead of expectations and the Board remains positive andconfident of the prospects for the 2007 financial year. Iain Paterson Ian TomkinsChairman Chief Executive Consolidated Income Statement Six months to Six months to Year ended 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited Notes £000 £000 £000Continuing operationsRevenue 31,277 26,175 82,368Cost of sales (19,243) (16,236) (43,885) __________ __________ __________Gross profit 12,034 9,939 38,483Other operating income 123 145 278 Administrative expenses before amortisation (7,159) (6,669) (14,112) Amortisation of acquired intangibles 1 (794) (733) (1,330)Total administrative expenses (7,953) (7,402) (15,442)Profit on disposal of group undertakings - - 158Share of results of associate (23) (71) 564 __________ __________ __________Operating profit 4,181 2,611 24,041Finance income 3 872 641 1,368Finance costs (312) (285) (621) __________ __________ __________Profit on ordinary activities before taxation 4,741 2,967 24,788Tax 5 (1,433) (928) (7,351) __________ __________ __________Profit for the period from continuing operations 3,308 2,039 17,437 __________ __________ __________Attributable to: Equity holders of the parent 3,327 2,022 17,401 Minority interests (19) 17 36 __________ __________ __________ 3,308 2,039 17,437 __________ __________ __________ Earnings per share (p)Basic 6 1.3 0.8 6.9Diluted 6 1.3 0.8 6.7 __________ __________ __________ The results stated above relate to continuing activities of the Group. Consolidated Balance Sheet 30 September 31 March 2007 31 March 2006 2006 Notes Unaudited Unaudited Audited £000 £000 £000Non-current assetsGoodwill 34,391 32,705 34,406Other intangible assets 5,021 5,689 5,869Property, plant & equipment 1,415 1,234 1,269Investments in associates 1,446 1,033 1,438Venue advances and other loans 2,588 3,180 3,015Deferred tax asset 2,323 1,797 2,022 ___________ ___________ ___________ 47,184 45,638 48,019Current assetsTrade and other receivables 7 26,994 29,345 29,594Cash and cash equivalents 43,656 22,601 31,883 ___________ ___________ ___________ 70,650 51,946 61,477 Total assets 117,834 97,584 109,496 Current liabilitiesBank overdraft (6,237) (7,749) (10,717)Trade and other payables 7 (66,739) (55,718) (50,711)Provisions (1,025) (535) (907) ___________ ___________ ___________ (74,001) (64,002) (62,335)Non-current liabilitiesProvisions (1,284) (1,902) (1,367)Deferred tax liabilities (2,215) (1,549) (2,145) ___________ ___________ ___________ (3,499) (3,451) (3,512) Total liabilities (77,500) (67,453) (65,847) ___________ ___________ ___________Net assets 40,334 30,131 43,649 ___________ ___________ ___________Capital and reservesCalled-up share capital 2,609 2,607 2,609Share premium account 727 558 698Merger reserve 2,746 2,746 2,746Capital redemption reserve 291 291 291ESOT reserve (1,658) (3,021) (3,016)Retained earnings 38,795 25,861 40,555Own shares held (3,566) - (1,142)Hedge and translation reserve 390 878 889 ___________ ___________ ___________Equity attributable to equity holders of the parent 40,334 29,920 43,630 ___________ ___________ ___________Minority interests - 211 19 ___________ ___________ ___________Total equity 40,334 30,131 43,649 ___________ ___________ ___________ Consolidated Cash Flow Statement Six months to Six months Year ended 30 31 March to 31 March September 2007 2006 2006 Notes Unaudited Unaudited Audited £000 £000 £000Cash flows from operating activitiesOperating profit from continuing operations 4,181 2,611 24,041Adjustments for:Depreciation and amortisation 1,065 987 1,895Other non-cash expenses 791 102 208Share of associate (profit)/loss 23 71 (564)Gain on disposal of subsidiary - - (158)Increase/(decrease) in provisions 202 (22) (213) __________ __________ __________Operating cash flows before movements in working 6,262 3,749 25,209capitalDecrease/(increase) in receivables 2,819 (961) (233)Increase in payables 15,274 14,767 9,244 __________ __________ __________Cash generated from operations 24,355 17,555 34,220Tax paid (3,294) (4,352) (9,064)Venue advances and loans (728) (6,773) (7,422) __________ __________ __________Net cash from operating activities 20,333 6,430 17,734 Investing activitiesInterest received 872 409 925Dividends received from associates - 322 422Acquisition of Intangibles (133) (1,061) (3,026)Purchase of property, plant & equipment (293) (226) (422) __________ __________ __________Net cash used in investing activities 446 (556) (2,101) Financing activitiesDividends paid (6,316) (4,623) (7,143)Interest paid (312) (285) (621)Net cash flow in relation to ESOT shares 1,811 541 541Purchase of own shares - - (1,142)Proceeds from issue of share capital 11 510 634 __________ __________ __________Net cash flows from financing activities (4,806) (3,857) (7,731) Net increase in cash and cash equivalents 15,973 2,017 7,902 Net cash and cash equivalents at beginning of 21,166 13,019 13,019periodEffect of foreign exchange rates 280 (184) 245 __________ __________ __________Net cash and cash equivalents at end of period 8 37,419 14,852 21,166 __________ __________ __________ 31 March 2007 31 March 2006 30 September 2007 £000 £000 £000Comprised of:Cash and cash equivalents 43,656 22,601 31,833Bank overdrafts (6,237) (7,749) (10,717) __________ __________ __________ 37,419 14,852 21,166 __________ __________ __________ Consolidated Statement of Recognised Income and Expense Six months to 31 Six months to Year ended 30 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £000 £000 £000 Currency translation on net investment in subsidiary (276) 78 (197)undertakings(Loss)/gain on cash flow hedge (18) - 356Tax on items taken directly to equity - - 159 __________ __________ __________Net (expense)/income recognised directly in equity (294) 78 318 Transferred to profit or loss on cash flow hedges (202) - (22)Implementation of IAS 39 - - (500)Profit for the period attributable to the 3,308 2,039 17,437shareholders __________ __________ __________Total recognised income and expense for the period 2,812 2,117 17,233 __________ __________ __________ Attributable to: Equity holders of the parent 2,831 2,100 17,197 Minority interests (19) 17 36 __________ __________ __________ 2,812 2,117 17,233 __________ __________ __________ Notes 1. The interim results have been prepared in accordance with IFRS thatthe directors expect to be applicable as at 30 September 2007. IFRS are subjectto amendment or interpretation by the International Accounting Standards Boardand there is an ongoing process of review and endorsement by the EuropeanCommission. The financial information for the period ended 31 March 2007 is unaudited anddoes not constitute statutory accounts as defined by Section 240 of theCompanies Act 1985. The interim results are prepared on the basis of accountingpolicies set out in the annual financial statements of the Group for the yearended 30 September 2006. These interim results were approved by the Board on 18May 2007 and copies of this document are being sent to shareholders. Furthercopies are available from the Company's registered office. 2. The results for the year ended 30 September 2006 have been extractedfrom the statutory accounts, which have been reported on by the Group's auditorsand have been delivered to the Registrar of Companies. The auditors' report wasunqualified and did not contain any statement under section 237 (2) or (3) ofthe Companies Act 1985. 3. Finance income Six months to Six months to Year ended 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £000 £000 £000 Interest receivable from bank deposits 830 386 787Interest receivable from Inland revenue repayments 28 - 115Interest receivable on advances to venues 11 18 17Interest receivable on loan to Incheba Praha - 5 5Unwind of fair value discount on venue advances 3 232 444 __________ __________ __________ 872 641 1,368 __________ __________ __________ 4. Reconciliation of headline profit before taxation to profit on ordinaryactivities before taxation Six months to Six months to Year ended 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £000 £000 £000 Profit on ordinary activities before taxation 4,741 2,967 24,788Amortisation of acquired intangibles 794 733 1,330(Profit) on disposal of subsidiary undertakings - - (158) __________ __________ __________Headline profit before taxation 5,535 3,700 25,960 __________ __________ __________ 5. Taxation Six months to Six months to Year ended 30 31 March 2007 31 March 2006 September 2006 Unaudited Unaudited Audited £000 £000 £000Current tax UK corporation tax 1,002 644 3,959 Foreign tax 646 552 3,388 __________ __________ __________ 1,648 1,196 7,347Deferred tax (215) (268) 4 __________ __________ __________Tax on profit on ordinary activities 1,433 928 7,351 __________ __________ __________ Tax at the interim is charged at 30% (2006: 31%) representing the bestestimate of the weighted average annual corporation tax expected for thefinancial year. 6. The calculations of earnings per share are based on the following resultsand numbers of shares. Headline diluted Basic and diluted 2007 2006 2007 2006 £000 £000 £000 £000 Profit for the financial period 3,327 2,022 3,327 2,022Amortisation of acquired intangibles 794 733 - -Tax effect of amortisation (157) (158) - - ________ ________ ________ ________ 3,964 2,597 3,327 2,022 ________ ________ ________ ________ 2007 2006 Number of shares ('000) Number of shares ('000)Weighted average number of shares:For basic earnings per share 253,505 250,710Dilutive effect of exercise of share options 7,382 10,406 ___________ ___________For diluted earnings per share 260,887 261,116 ___________ ___________ Headline diluted earnings per share is intended to provide a consistent measureof group earnings on a year on year basis. Headline diluted earnings per shareis calculated using profit for the financial year before amortisation andimpairment of goodwill and profits or losses arising on disposal of groupundertakings. 7. Trade and other receivables include trade debtors of £14.9m (31 March2006: £13.5m; 30 September 2006: £22.0m) and venue advances and other loans of£2.6m (31 March 2006: £6.4m; 30 September 2006: £4.1m). Trade and other payables include deferred income of £55.8m (31 March 2006:£47.4m; 30 September 2006: £39.7m). 8. As a result of the capital reduction in July 2005, £4.1m is held in atrust account, which will be released as certain creditors are paid in full. At31 March 2007, £0.5m of the cash in trust was expected to be released within oneyear. Financial Calendar Interim dividend Record date 1 June 2007 Payment date 22 June 2007 Final dividend Record date January 2008 Payment date March 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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