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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ite Group Plc | LSE:ITE | London | Ordinary Share | GB0002520509 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 82.50 | 82.30 | 82.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMITE
RNS Number : 2005F
ITE Group PLC
16 May 2017
16 May 2017
ITE GROUP PLC
INTERIM RESULTS & STRATEGY UPDATE ANNOUNCEMENT
Good performance in challenging trading conditions
3 Year Transformation & Growth Programme (TAG) initiated
Hot Features
Premium
Six months to Six months to
31 March 2017 31 March 2016
Volume sales 325,200 m(2) 340,100 m(2)
Revenue GBP69.6m GBP63.6m
Pre-tax profit GBP3.1m GBP10.6m
Headline pre-tax profit(1) GBP15.4m GBP19.0m
Diluted earnings per share 0.6p 2.8p
Headline diluted earnings per share(2) 3.9p 5.2p
Interim dividend per share 1.5p 1.5p
Net debt GBP55.2m GBP69.6m
Financial highlights
-- Results in line with management expectations -- The first period of like-for-like(3) growth after three years of difficult trading
-- Statutory revenue up to GBP69.6 million; statutory profit before tax down to GBP3.1 million due to event timings, foreign exchange and restructuring costs
-- Ongoing stabilisation in Moscow is encouraging but trading remains challenging in a number of regions
-- Continued strong cash generation; reduced net debt from GBP59.1 million at 30 September 2016 to GBP55.2 million at 31 March 2017
-- Interim dividend maintained -- Improved level of bookings partly reflects new management sales initiatives -- Confidence in full year outcome with over 98% of revenues for FY 2017 contracted
Strategy update
-- Comprehensive review of the strategy and business completed
-- 3 year Transformation & Growth Programme ("TAG") to create a scalable platform and drive organic growth
-- Investment of up to GBP20 million to be funded by existing cash generation; anticipated strong ROI by 2020
-- Dividend cover maintained at 2x throughout investment period
Mark Shashoua, CEO of ITE Group plc, commented:
"I'm pleased to report that the Group has arrested its recent decline and posted like-for-like growth after three years of difficult trading. The first half performance reflects a more stable market in Moscow which is encouraging, but mixed market conditions remain in some of our other regions. We have completed a thorough review of the entire business and have concluded that there are significant organic opportunities in ITE's existing core portfolio that have yet to be realised.
Therefore, I am delighted to announce today the evolution of our strategy and a GBP20 million Transformation and Growth Programme that will deliver a stronger, more scalable platform to drive organic growth with an emphasis on retention, content and customer service. By putting our exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth and shareholder value."
1 Headline pre-tax profit is defined as profit before tax and adjusting items which include amortisation of acquired intangibles, impairment of goodwill, intangible assets and investments, profits or losses arising on disposal of Group undertakings, restructuring costs, transaction and integration costs on completed and pending acquisitions and disposals, tax on income from associates and joint ventures, gains or losses on the revaluation of deferred/contingent consideration and on equity option liabilities over non-controlling interests, and imputed interest charges on discounted equity option liabilities - see note 3 to the condensed consolidated financial statements for details.
2 Headline diluted earnings per share is calculated using profit attributable to shareholders before adjusting items - see notes 3 and 6 to the condensed consolidated financial statements for details.
3 Where used, like-for-like or underlying measures are stated on a constant currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences, biennial events and net finance costs.
Enquiries:
Mark Shashoua, Chief Executive
Officer
Andrew Beach, Chief Financial ITE Group 020 7596
Officer plc 5000
020 3727
Charles Palmer/Emma Appleton FTI Consulting 1021
020 7260
Nick Westlake/Toby Adcock Numis 1000
Executive summary
ITE has delivered a set of interim results which are assisted by the ongoing stabilisation of Moscow but reflect continued challenging trading conditions in some of the Group's other markets. Revenues of GBP69.6 million for the first six months are 9% higher than last year as a result of improved underlying trading (GBP1.4 million), foreign exchange (GBP5.8 million) and acquired events (GBP3.3 million), offset by the adverse impact from net biennial events (GBP2.3 million) and changes in event timings (GBP2.2 million). The improvement in underlying trading (GBP1.4 million) represents an increase of 2%.
Headline pre-tax profits of GBP15.4 million are 19% lower than the same period last year, yet up 2% on a like-for-like basis. The reduction is due in part to the non-recurrence of a GBP1.5 million foreign currency exchange gain in the comparative period, which has been replaced by a loss of GBP0.2 million in the current period. Underlying trading (GBP0.3 million), which includes the share of profits from associates and previously announced additional investment in overheads, foreign exchange (GBP0.2 million) and acquisitions (GBP0.5 million) have increased headline pre-tax profits, but are offset by the net impact from biennials (GBP0.8 million), timing changes (GBP1.8 million) and increased net finance costs (GBP0.3 million).
Reported profits before tax were GBP3.1 million (2016: GBP10.6 million). This is after including one-off restructuring costs of GBP2.3 million incurred in the first phase of the TAG Programme, announced today.
In December 2016 the Group completed the acquisition of the Gehua portfolio of events in China, with the first event post-ownership running in March contributing revenues of GBP0.9 million. Other events relating to recent acquisitions running for the first time under ITE ownership contributed revenues of GBP2.4 million, the majority of which relate to ABEC events in India.
The ongoing stabilisation of the trading environment in Moscow has enhanced performance in this significant part of our business, but this stabilisation has not yet spread to the remaining regions of Russia, nor to Kazakhstan or Azerbaijan, which continue to be impacted by the difficult trading environment we have experienced since the fall in oil prices. In Moscow like-for-like volumes over the first half were 5% higher than this time last year, although for Russia overall growth was just 1% and in Kazakhstan volumes were 25% lower and in Azerbaijan 42% lower.
In other regions, the Group has seen demonetisation in India, which has created uncertainty for many in the country, resulting in cancellations and postponements of a number of our smaller events. The continued uncertainty in Turkey has resulted in a number of cancellations by international exhibitors, although the improvement in relations with Russia resulted in the return of some Turkish exhibitors to our Russian exhibitions.
Strategic Review
A detailed diagnostic of the current portfolio and its growth potential has been undertaken as part of the Group's strategy review. Alongside this, a comprehensive review of key business areas was conducted including sales and marketing, content, show operations and support functions.
In recent years the Group pursued an acquisition-led strategy in order to diversify away from Russia and Central Asia which worked well when market conditions were buoyant, but as has been well documented, trading performance has deteriorated as macro-economic conditions have become more challenging. To execute its diversification strategy and in order to protect margins, investment was held back across the portfolio.
During the review process, management time has been spent on understanding where ITE's strengths lie and how the business needs to evolve. The events industry has changed and continues to evolve faster than ever and that change is largely driven by the different demands of our customers (exhibitors and visitors). More than ever, there is a constant need for Return on Investment and Return on Time which are critical key metrics for our customers and also a need for new and engaging customer experience. Therefore running market leading events is absolutely paramount.
Following a thorough strategy and business review, the Group believes the future is to move decisively from being a decentralised, geographically structured business to one that is product-led with strong regional platforms.
Our vision is "to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers." By putting exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth for our shareholders.
The Group's focus on a product-led strategy will see ITE focus on events that are market leading or have a clear path to become number one in their sector. To create a best in class events business, the Group will invest in its people, systems and products in order to build a high quality portfolio and sustainable model for the long-term.
The Transformation & Growth Programme ("TAG")
In order to drive the transition, ITE has initiated the TAG Programme which will see it invest up to GBP20 million over the next three years, creating a stronger, more scalable platform. The TAG Programme comprises of three pillars of strategic activity to drive revenue and accelerate growth as follows:
1) Create a Scalable Platform
The TAG Programme will introduce transformational levers and investment will be spread across five areas to:
-- Implement best practice across the business -- Build and maintain 'fit for purpose' IT infrastructure and systems -- Invest in show operations -- Drive a performance culture -- Build capability and talent
As part of creating a scalable platform, the Group will change its operating model and transition from a model organised and managed by geography to a more centralised one that supports a product-led business. As part of TAG the Group will develop an 'ITE way' creating a blueprint to run events that is consistent globally.
2) Manage the Portfolio
The Group is implementing a more rigorous approach to allocation of capital. ITE currently runs 269 events and moving forward the Group will focus its capital resource on events that are market leading, or have the potential to be, delivering greater return on the Group's investment and time.
Following the review, the Group has deliberately segmented its business into Core and Non-Core, enabling management to increase its focus on products that present the greatest opportunities whilst reducing distraction from smaller shows.
The Core shows are of strategic importance to our future and include the Group's largest shows, those with the greatest potential for growth and a number of smaller but strategically important shows. The Core shows currently represent 85% of revenue and 85% of profit. The Non-Core shows consist of smaller shows with less potential for growth.
As part of the Group's strategy, its top priority will be to apply a full suite of transformational levers to its Core events which present the best long-term growth opportunities and to realise their full potential. This will include investing in content to drive great customer experience, retention and pricing.
The Group will continue to pro-actively review its portfolio on an ongoing basis.
3) Product-led Acquisitions
The Group will look to make selective product-led acquisitions to accelerate growth in line with strict M&A criteria. Each opportunity will be carefully reviewed but will not be limited to any particular geography or vertical as the Group aims to run the best shows in the best industries anywhere in the world.
TAG returns and funding
The Group has committed to investing up to GBP20 million over a three year period on the TAG Programme. This one-off cost will be split approximately one third in the current financial year, 2017, approximately 40% to 50% in 2018, and the remainder in 2019. This investment will cover both capital and operating expenditure. It is the intention to report one-off expenditure directly associated with the TAG Programme as an adjusting item, which will not affect headline results.
We anticipate a positive return on investment within three years and cash payback within four years.
Whilst we expect to continue to grow revenues, both headline PBT and EPS will be impacted in the current financial year - followed by anticipated flat or low growth in 2018 and anticipated double digit growth into 2019. This is due to the ongoing costs of running the new processes introduced across the programme, which will be reported within headline results.
The programme is designed to deliver mid-term sustainable high single digit revenue growth and high 20's operating margins.
We plan to fund the programme from cash generated by our operations. Throughout the duration of the programme, the Group expects to maintain its net debt to EBITDA within a target range of 1.5 to 2 times.
2017-2020 Dividend
ITE intends to maintain its dividend cover of two times earnings throughout its planned investment period. The Board has announced an interim dividend this year of 1.5p (2016: 1.5p).
More detail will be provided at the Group's analyst presentation today and a recording of the event will be published in the investor relations section of ITE's website.
Outlook
Whilst we have seen a recent recovery in Moscow, market forecasts predict a much lower rate of growth than in the past. Trading conditions in other regions in which the Group operates continue to be challenging. Group revenues booked for 2017 are GBP136 million (at current exchange rates) representing circa 98% of market expectations for the full year. On a like-for-like basis these revenues are circa 5% ahead of this time last year, with trading volumes circa 2% lower. This improvement partly reflects earlier bookings following investment in the new initiatives introduced by management. With this good visibility on current year bookings the Board remains confident in the full year outcome and in the Group's future prospects as it embarks on the next stage of its development.
Financial performance
Statutory results
Revenues for the first six months of the year were GBP69.6 million (2016: GBP63.6 million). The uplift in revenue includes the ABEC Acetech Bangalore and the Gehua Shanghai Hosiery events running for the first time under ITE's ownership, a favourable foreign exchange impact partly offset by the negative timing and biennial pattern affecting the first six months. In addition, underlying trading (excluding currency benefit) is up GBP1.4m representing like-for-like growth of 2%. This is the first period of growth after three years of difficult trading.
The impact of foreign exchange rates (both on overseas costs incurred in the period and overseas costs recognised in this period relating to events in future periods) almost entirely offsets the favourable impact of foreign exchange rates on revenues meaning there is no favourable impact on profits from the movement in exchange rates since last year.
The average exchange rates over the first six months of the year are:
Six months ended 31 March 2017 Six months ended 31 March 2016 Movement
--------------- ------------------------------- ------------------------------- ---------
Russian ruble 75.6 103.2 +27%
--------------- ------------------------------- ------------------------------- ---------
Turkish lira 4.3 4.3 -
--------------- ------------------------------- ------------------------------- ---------
Indian rupee 83.3 98.2 +15%
--------------- ------------------------------- ------------------------------- ---------
Reported pre-tax profits were GBP3.1 million (2016: GBP10.6 million). This is after including one-off restructuring costs of GBP2.3 million incurred in the first phase of the TAG programme, announced today. It also includes a net charge of GBP0.8 million (2016: net credit of GBP1.3 million) on the revaluation of our liabilities relating to completed acquisitions, which in the current period principally relates to the unwinding of the discounting applied to our equity option liabilities (GBP1.6 million), offset by the net revaluation of equity option liabilities and deferred and contingent consideration payable (GBP0.8 million). The movements primarily relate to the options to acquire the 40% shareholding of ABEC we do not currently own and earn out obligations on the ABEC and Fasteners acquisitions completed in the prior year.
Reported diluted earnings per share for the first six months were 0.6p (2016: 2.8p). The decrease in earnings per share is due to the reduction in profits in the period and also an increase in the Group's effective tax rate, which has increased due to an anticipated increase in withholding taxes on dividends from overseas entities as profits increase.
Headline results
In addition to the statutory results, headline results are presented, which are the statutory results after excluding a number of adjusting items, as the Board consider this to be the most appropriate way to measure the Group's underlying performance. We also report a like-for-like measure, on a constant currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences, biennial events and net finance costs. In addition to providing a more comparable set of results year-on-year, this is also in line with similar adjusted measures used by our peer companies and therefore facilitates comparisons across the industry.
Headline pre-tax profits for the first six months of the year were GBP15.4 million (2016: GBP19.0 million), in part as a result of the movement from a foreign exchange gain of GBP1.5 million in 2016 to a loss of GBP0.2 million in the current period. Underlying trading increased (GBP0.3 million) and foreign exchange (GBP0.2 million) and the first time impact of acquisitions (GBP0.5 million) both contributed to an increase, but these were offset by net biennials (GBP0.8 million), timing changes (GBP1.8 million) and increased net finance costs (GBP0.3 million). On a like-for-like basis, headline pre-tax profits are up 2%.
Headline diluted earnings per share for the first six months were 3.9p (2016: 5.2p), reflecting the reduced headline earnings in the period and the increase in the Group's effective tax rate, as detailed above.
The headline results are presented after excluding adjusting items consistent with those excluded in the year end annual report, but after also excluding restructuring costs. These are principally costs associated with designing and implementing the Group's TAG Programme, announced with the interim results today. The costs incurred to date relate to the design and diagnostic phase of the transformation programme, and further costs are expected during the remainder of the current financial year and across the subsequent two years as we move into the implementation and deployment phase.
The restructuring costs have been presented separately in order to report what the Board consider to be the most appropriate measure of underlying performance of the Group and to provide additional information to users of the interim report on the scale and progress of the Group's transformation programme.
The following table reconciles statutory profit/(loss) before tax to headline pre-tax profit:
Six months Six months Year ended
to 31 March to 31 March 30 September
2017 2016 2016
GBP000 GBP000 GBP000
Profit/(loss) on ordinary
activities before taxation 3,130 10,616 (4,095)
Operating items
Amortisation of acquired
intangible assets 7,832 7,603 15,468
Impairment of goodwill - 1,236 24,650
Impairment of investments
in associates and joint
ventures - - 1,859
Restructuring costs 2,347 - -
Transaction costs on completed
and pending acquisitions 184 285 330
Profit on disposal of investments - (1,497) (1,498)
Tax on income from associates
and joint ventures 1,140 1,029 1,078
Financing items
Revaluation of liabilities
on completed acquisitions 793 (316) (1,288)
__________ __________ __________
Headline pre-tax profit 15,426 18,956 36,504
Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. Restructuring costs are the costs incurred in designing and implementing the Group's new strategy. Transaction costs on completed and pending acquisitions relates principally to costs incurred on the Gehua acquisition completed in December 2016. Tax on income from associates and joint ventures is an adjustment to ensure consistency with pre-tax operating profits.
Revaluation of liabilities on completed acquisitions include the losses from the revaluation of our equity options over non-controlling interests in our subsidiaries (charge of GBP0.5 million), principally in relation to ABEC, revaluations of deferred and contingent consideration (credit of GBP1.3 million), principally in relation to Fasteners, and the imputed interest charge on the unwinding of the discounting on the Group's equity option liabilities (charge of GBP1.6 million).
Cash flows
The Group's cash flow generated from operations over the first six months has improved to GBP21.8 million (2016: GBP18.0 million), and during the period GBP5.9 million has been applied to fund acquisitions and GBP5.4 million to dividends, resulting in the Group's net debt standing at GBP55.2 million at 31 March 2017 (2016: GBP69.6 million). Consistent with the comparative period, cash conversion for the first half was over 100%. During the period the Group negotiated a relaxation of our leverage covenant with our banks for the final three quarters of the current financial year, ending 30 September 2017.
Trading highlights and review of operations
During the period the Group organised 122 events (2016: 134 events) which generated actual revenue growth of 9%. Like-for-like revenues were 2% higher than for the same period last year.
Actual volume sales for the period were 325,200 sqm (2016: 340,100 sqm), reflecting the weaker biennial pattern, timing changes and weaker trading in Central Asia, Turkey and India, partially offset by the stabilisation of trading conditions in Moscow. Volume sales were 5% lower on a like-for-like basis in comparison to the same period last year.
A summary of the Group's revenue and gross profits for the period is set out below.
Volume Sales Revenue Gross Profit
sqm'000 GBP'm GBP'm
------------------------- ------------- -------- -------------
First half 2016 340 63.6 27.6
------------------------- ------------- -------- -------------
Non-annual 2016 (19) (2.9) (1.0)
------------------------- ------------- -------- -------------
Annually recurring 2016 321 60.7 26.6
------------------------- ------------- -------- -------------
Acquisitions 26 3.3 0.9
------------------------- ------------- -------- -------------
FX Translation - 5.8 1.5
------------------------- ------------- -------- -------------
Like-for-like change (16) 1.4 0.1
------------------------- ------------- -------- -------------
Annually recurring 2017 331 71.2 29.1
------------------------- ------------- -------- -------------
Timing differences (7) (2.2) (1.8)
------------------------- ------------- -------- -------------
Non-annual 2017 1 0.6 0.3
------------------------- ------------- -------- -------------
First half 2017 325 69.6 27.6
------------------------- ------------- -------- -------------
Russia
The economic situation in Moscow has continued to stabilise although the regional offices continue to experience tough trading conditions. Like-for-like volume sales in Moscow were 5% higher than the comparative period and across Russia were 1% higher than the comparative period.
Moscow's largest event in the first half was the Moscow International Travel & Tourism (MITT) event, which increased volume sales to 13,700 sqm (2016: 11,700 sqm) reflecting the return of Turkish exhibitors and an increase in other international and domestic stands.
Central Asia
Trading in Central Asia remains challenging with like-for-like volume sales for the first six months 22% lower than for the comparative period.
The largest part of the Group's business in the region is Kazakhstan, which reported a 25% decrease in like-for-like volume sales. The largest event in the region is the Kazakhstan International Oil & Gas Exhibition (KIOGE), held in October 2016, which was smaller than this time last year at 3,700 sqm (2016: 5,800 sqm), reflecting the continued impact of the oil price and local currency devaluation on the region.
Eastern & Southern Europe
In Turkey, the Group has seen a reduction of 18% in like-for-like volumes due to the impact of regional unrest on the local economy resulting in a reduction in international interest in the region. The largest event taking place in the first half was the travel event EMITT, which achieved volumes of 23,300 sqm (2016: 26,700 sqm) against a worsening backdrop facing the Turkish tourist industry.
Ukraine grew like-for-like volumes by 37% but still represents less than 5% of Group profits.
Asia
Like-for-like volume sales for the first six months in Asia were 6% lower than for the comparative period.
The Group's large construction events in India were held before demonetisation occurred in November, but some of our smaller Indian events have subsequently been affected, with a small number of cancellations and postponements. Acetech Mumbai is the largest construction event in India and remained wall-bound in its venue, although Acetech Delhi saw volumes decrease by 7% to 19,000 sqm from 20,400 sqm.
Rest of the World
Africa Oil Week ran in October 2016 and, as expected, was adversely affected by the difficult trading conditions affecting the oil industry. There was still excellent representation from all usual participating companies, although many companies sent fewer delegates with a resulting impact on revenues of over 20%. The Breakbulk Americas event ran in September 2016 (and will run again in October 2017) and so does not - and will not - feature in the 2017 results. Trading has held firm for the mid-market focused fashion event, MODA, held at the NEC in Birmingham and volumes were slightly down on prior year, selling 14,400 sqm (2016: 15,000 sqm).
April trading
April is the largest trading month for the Group. Mosbuild (which will be renamed WorldBuild Moscow next year) has benefitted from the stabilisation of the Moscow economy and the increased sales focus on this event, resulting in volume improvement from 31,200 sqm last year to 34,300 sqm this year. In India, as anticipated, the Security Safety show has seen withdrawals as the impact of de-monetisation affects our events. In Turkey, also as anticipated, the Beauty Eurasia event was significantly smaller due to the uncertainty created by the constitutional referendum particularly impacting our April events.
Set out below are the results for the Group's principal events taking place in April 2017:
2017 (sqm) 2016 (sqm) Variance (%)
---------------------------- ----------- ----------- -------------
Mosbuild (Russia) 34,300 31,200 +10%
---------------------------- ----------- ----------- -------------
TransRussia (Russia) 7,400 7,100 +4%
---------------------------- ----------- ----------- -------------
ExpoElectronica (Russia) 8,200 7,600 +8%
---------------------------- ----------- ----------- -------------
Breakbulk Europe (Belgium) 7,000 6,600 +6%
---------------------------- ----------- ----------- -------------
Beauty Eurasia (Turkey) 6,000 8,500 -29%
---------------------------- ----------- ----------- -------------
Secutech (India) 6,200 7,200 -14%
---------------------------- ----------- ----------- -------------
Condensed Consolidated Income Statement
For the six months ended 31 March 2017
Six months to 31 Six months to 31 Year ended 30 September
March 2017 (Unaudited) March 2016 (Unaudited) 2016 (Audited)
Adjusting Adjusting Adjusting
items items items
(note (note (note
Headline 3) Statutory Headline 3) Statutory Headline 3) Statutory
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 69,588 - 69,588 63,645 - 63,645 134,422 - 134,422
Cost of sales (42,016) - (42,016) (36,082) - (36,082) (75,862) - (75,862)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Gross profit 27,572 - 27,572 27,563 - 27,563 58,560 - 58,560
Other operating
income 333 - 333 230 - 230 615 - 615
Administrative
expenses (15,607) (10,363) (25,970) (13,523) (7,627) (21,150) (26,203) (40,809) (67,012)
Foreign exchange
(loss)/gain
on operating
activities (246) - (246) 1,484 - 1,484 1,956 - 1,956
Share of results of
associates
and joint ventures 5,004 (1,140) 3,864 4,530 (1,029) 3,501 4,628 (1,078) 3,550
_________ _________ _________ _________ _________ _________ _________ _________ _________
Operating
profit/(loss) 17,056 (11,503) 5,553 20,284 (8,656) 11,628 39,556 (41,887) (2,331)
Investment revenue 283 1,309 1,592 402 1,495 1,897 554 6,940 7,494
Finance costs (1,913) (2,102) (4,015) (1,730) (1,179) (2,909) (3,606) (5,652) (9,258)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) on
ordinary
activities before
taxation 15,426 (12,296) 3,130 18,956 (8,340) 10,616 36,504 (40,599) (4,095)
Tax on profit/(loss)
on ordinary
activities 4 (3,466) 3,582 116 (3,364) 2,397 (967) (7,059) 3,983 (3,076)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) for the
period 11,960 (8,714) 3,246 15,592 (5,943) 9,649 29,445 (36,616) (7,171)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Attributable to:
Owners of the
Company 10,208 (8,714) 1,494 13,095 (5,943) 7,152 27,289 (36,616) (9,327)
Non-controlling
interests 1,752 - 1,752 2,497 - 2,497 2,156 - 2,156
_________ _________ _________ _________ _________ _________ _________ _________ _________
11,960 (8,714) 3,246 15,592 (5,943) 9,649 29,445 (36,616) (7,171)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Earnings per share
(p)
Basic 6 3.9 0.6 5.2 2.8 10.7 (3.6)
Diluted 6 3.9 0.6 5.2 2.8 10.7 (3.6)
_________ _________ _________ _________ _________ _________ _________ _________ _________
The results stated above relate to continuing activities of the Group.
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2017
Six months to Six months to
31 March 2017 31 March 2016 Year ended 30 September 2016
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit/(loss) for the period attributable to
shareholders 3,246 9,649 (7,171)
Cash flow hedges:
Movement in fair value of cash flow hedges 1,336 (3,474) (7,042)
Fair value of cash flow hedges released to the
income statement (387) (340) (1,293)
Currency translation movement on net investment
in subsidiary undertakings 5,276 3,788 17,414
__________ __________ __________
9,471 9,623 1,908
Tax relating to components of comprehensive income (290) 693 1,669
__________ __________ __________
Total comprehensive income for the period 9,181 10,316 3,577
__________ __________ __________
Attributable to:
Owners of the Company 7,429 7,819 1,421
Non-controlling interests 1,752 2,497 2,156
__________ __________ __________
9,181 10,316 3,577
__________ __________ __________
All items recognised in comprehensive income may be reclassified subsequently to the income statement.
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
31 March 2017
Six month period ended 31 March
2017 (Unaudited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at
1 October 2016 2,621 20,629 2,746 457 (4,370) 115,450 (21,317) (42,289) (2,992) 70,935 25,427 96,362
Net profit for
the period - - - - - 1,494 - - - 1,494 1,752 3,246
Currency
translation
movement on
net
investment in
subsidiary
undertakings - - - - - - - 5,276 - 5,276 - 5,276
Movement in
fair
value of cash
flow hedges - - - - - - - - 1,336 1,336 - 1,336
Gain on
effective
portion of
cash
flow hedges
recognised
in /
(released
from)
reserves - - - - - - - - (387) (387) - (387)
Tax relating
to components
of
comprehensive
income - - - - - - - - (290) (290) - (290)
Total
comprehensive
income for the
6 month period
ending
31 March 2017 - - - - - 1,494 - 5,276 659 7,429 1,752 9,181
Dividends 16 (16) - - - (5,350) - - - (5,350) (112) (5,462)
Exercise of
share
options - - - - 6 (6) - - - - - -
Share-based
payments - - - - - 143 - - - 143 - 143
Issue of
shares 23 3,444 - - - - - - - 3,467 - 3,467
Tax debited to
equity - - - - - 12 - - - 12 - 12
Acquisition of
subsidiary - - - - - - - - - - 4,636 4,636
Balance as at
31 March 2017 2,660 24,057 2,746 457 (4,364) 111,743 (21,317) (37,013) (2,333) 76,636 31,703 108,339
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
31 March 2017
Six month period ended 31 March
2016 (Unaudited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at
1 October 2015 2,570 14,875 2,746 457 (4,825) 140,031 (16,843) (59,703) 3,674 82,982 16,361 99,343
Net profit for
the period - - - - - 7,152 - - - 7,152 2,497 9,649
Currency
translation
movement on net
investment in
subsidiary
undertakings - - - - - - - 3,788 - 3,788 - 3,788
Movement in fair
value of cash
flow hedges - - - - - - - - (3,474) (3,474) - (3,474)
Gain on
effective
portion of cash
flow hedges
recognised
in / (released
from) reserves - - - - - - - - (340) (340) - (340)
Tax relating
to components
of
comprehensive
income - - - - - - - - 693 693 - 693
Total comprehensive
income for the
6 month period
ending
31 March 2016 - - - - - 7,152 - 3,788 (3,121) 7,819 2,497 10,316
Dividends paid - - - - - (12,436) - - - (12,436) (1,423) (13,859)
Exercise of
share
options - - - - 5 (5) - - - - - -
Share-based
payments - - - - - 239 - - - 239 - 239
Tax debited to
equity - - - - - (554) - - - (554) - (554)
Acquisition of
subsidiary - - - - - - (13,159) - - (13,159) 17,086 3,927
Exercise put
option on
acquisition
of
non-controlling
interest - - - - - (429) 1,215 - - 786 (786) -
Balance as at
31 March 2016 2,570 14,875 2,746 457 (4,820) 133,998 (28,787) (55,915) 553 65,677 33,735 99,412
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
31 March 2017
Year ended 30 September 2016
(Audited):
Share Capital Put Non
Share Premium Merger Redemption ESOT Retained Option Translation Hedge Controlling Total
Capital Account Reserve Reserve Reserve Earnings Reserve Reserve Reserve Total interests Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at
1 October 2015 2,570 14,875 2,746 457 (4,825) 140,031 (16,843) (59,703) 3,674 82,982 16,361 99,343
Net
(loss)/profit
for the year - - - - - (9,327) - - - (9,327) 2,156 (7,171)
Currency
translation
movement on
net
investment in
subsidiary
undertakings - - - - - - - 17,414 - 17,414 - 17,414
Movement in
fair
value of cash
flow hedges - - - - - - - - (7,042) (7,042) - (7,042)
Fair value of
cash flow
hedges
released to
the
income
statement - - - - - - - - (1,293) (1,293) - (1,293)
Tax relating
to components
of
comprehensive
income - - - - - - - - 1,669 1,669 - 1,669
Total
comprehensive
income for the
year ended 30
September 2016 - - - - - (9,327) - 17,414 (6,666) 1,421 2,156 3,577
Dividends 5 (5) - - - (15,594) - - - (15,594) (1,520) (17,114)
Exercise of
share
options - - - - 455 (452) - - - 3 - 3
Share-based
payments - - - - - 390 - - - 390 - 390
Issue of
shares 46 5,759 - - - 449 - - - 6,254 - 6,254
Tax debited to
equity - - - - - (16) - - - (16) - (16)
Acquisition of
subsidiary - - - - - - (13,159) - - (13,159) 17,084 3,925
Exercise put
option on
acquisition
of subsidiary - - - - - (31) 8,685 - - 8,654 (8,654) -
Balance as at
30 September
2016 2,621 20,629 2,746 457 (4,370) 115,450 (21,317) (42,289) (2,992) 70,935 25,427 96,362
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Financial Position
31 March 2017
31 March 31 March 30 September
2017 2016 2016
Unaudited Unaudited Unaudited
Notes GBP000 GBP000 GBP000
Non-current assets
Goodwill 8 112,624 110,722 97,855
Other intangible assets 9 71,046 74,684 70,816
Property, plant & equipment 2,857 2,432 2,469
Interests in associates and joint ventures 10 49,724 50,224 45,677
Venue advances and other loans 3,767 3,148 2,945
Derivative financial instruments 14 8 152 -
Deferred tax asset 4,320 3,624 3,070
___________ ___________ ___________
244,346 244,986 222,832
Current assets
Trade and other receivables 11 59,471 44,661 50,610
Tax prepayment 375 249 2,115
Derivative financial instruments 14 15 882 -
Cash and cash equivalents 15,795 13,476 15,508
___________ ___________ ___________
75,656 59,268 68,233
Total assets 320,002 304,254 291,065
Current liabilities
Trade and other payables 12 (21,221) (16,859) (20,844)
Deferred income (80,115) (57,766) (61,918)
Derivative financial instruments 14 (21,875) (14,506) (5,904)
Provisions (269) (291) (240)
___________ ___________ ___________
(123,480) (89,422) (88,906)
Non-current liabilities
Bank loan 13 (70,966) (83,092) (74,604)
Provisions (168) (655) (189)
Deferred tax liabilities (13,848) (15,295) (12,675)
Derivative financial instruments 14 (3,201) (16,378) (18,329)
___________ ___________ ___________
(88,183) (115,420) (105,797)
Total liabilities (211,663) (204,842) (194,703)
___________ ___________ ___________
Net assets 108,339 99,412 96,362
___________ ___________ ___________
Equity
Share capital 15 2,660 2,570 2,621
Share premium account 24,057 14,875 20,629
Merger reserve 2,746 2,746 2,746
Capital redemption reserve 457 457 457
ESOT reserve (4,364) (4,820) (4,370)
Retained earnings 111,743 133,998 115,450
Put option reserve (21,317) (28,787) (21,317)
Translation reserve (37,013) (55,915) (42,289)
Hedge reserve (2,333) 553 (2,992)
___________ ___________ ___________
Equity attributable to equity holders of the parent 76,636 65,677 70,935
Non-controlling interest 31,703 33,735 25,427
___________ ___________ ___________
Total equity 108,339 99,412 96,362
___________ ___________ ___________
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2017
Six months Six months Year ended
to 31 March to 31 March 30 September
2017 2016 2016
Notes Unaudited Unaudited Audited
GBP000 GBP000 GBP000
---------------------------------------------------------------- ------ ------------- ------------- --------------
Cash flows from operating activities
Operating profit/(loss) from continuing operations 5,553 11,628 (2,331)
Adjustments for non-cash items:
Depreciation and amortisation 8,953 8,429 17,191
Impairment of goodwill 3 - 1,236 24,650
Impairment of investments in associates and joint ventures 3 - - 1,859
Share-based payments 143 239 390
Share of profit from associates and joint ventures (3,864) (3,501) (3,550)
Decrease in provisions (30) (41) (69)
Gain on disposal of property, plant and equipment - - (1)
Foreign exchange loss/(gain) on operating activities 246 (1,484) (1,956)
Profit on disposal of investments - (1,497) (1,498)
Fair value of cash flow hedges recognised in the income
statement (379) (171) (1,187)
Dividends received from associates and joint ventures 620 1,295 5,373
Operating cash flows before movements in working capital 11,242 16,133 38,871
(Increase)/decrease in receivables (7,778) 1,668 (4,254)
Venue advances and loans (2,500) (1,101) (2,867)
Utilisation & repayment of venue loans 2,077 1,349 3,901
Increase in deferred income 18,197 7,935 12,087
Increase/(decrease) in payables 599 (7,994) (6,735)
Cash generated from operations 21,837 17,990 41,003
Tax paid (2,608) (2,103) (6,668)
Net cash from operating activities 19,229 15,887 34,335
Investing activities
Interest received 283 233 385
Investment in associates and joint ventures - (1,684) (2,397)
Acquisition of businesses - cash paid (6,225) (16,167) (17,185)
Cash acquired through acquisitions 343 3,403 3,404
Purchase of property, plant and equipment and computer software (1,512) (1,388) (2,419)
Disposal of plant, property and equipment and computer software 10 23 112
Cash paid to acquire non-controlling interests - (1,874) (2,087)
---------------------------------------------------------------- ------ ------------- ------------- --------------
Net cash flows from investing activities (7,101) (17,454) (20,187)
Financing activities
Equity dividends paid (5,368) (12,427) (15,589)
Dividends paid to non-controlling interests (112) (1,423) (1,520)
Interest paid and bank charges (1,913) (1,730) (3,544) Proceeds from the issue of share capital & exercise of share options - - 3 Repayment/(drawdown) of borrowings (3,570) 13,476 4,988 Net cash flows from financing activities (10,963) (2,104) (15,662) ---------------------------------------------------------------- ------ ------------- ------------- -------------- Net increase/(decrease) in cash and cash equivalents 1,165 (3,671) (1,514) Net cash and cash equivalents at beginning of period 15,508 17,269 17,269 Effect of foreign exchange rates on cash and cash equivalents (878) (122) (247) ---------------------------------------------------------------- ------ ------------- ------------- -------------- Net cash and cash equivalents at end of period 15,795 13,476 15,508 ---------------------------------------------------------------- ------ ------------- ------------- --------------
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Net debt reconciliation
For the six months ended 31 March 2017
At 1 October 2016 Cash flow Foreign exchange At 31 March 2017
GBP000 GBP000 GBP000 GBP000
Cash 15,508 1,165 (878) 15,795
Bank loan (74,604) 3,570 68 (70,966)
Net debt (59,096) 4,735 (810) (55,171)
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Notes to the Interim Financial Statements
1. General Information and basis of preparation
The information for the year ended 30 September 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The annual financial statements of ITE Group plc are prepared in accordance with IFRS 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.
Accounting policies
The interim financial statements have been prepared on the basis of the accounting policies and methods of computation applicable for the year ended 30 September 2016. These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2016 except as described below.
No new standards, amendments to standards and interpretations have been adopted and applied in the period.
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
-- Amendments to IAS 7 Statement of cash flows -- Amendments to IFRS 2 Share-based payments -- Clarifications to IFRS 15 Revenue from contracts with customers -- IFRS 9 Financial instruments -- IFRS 15 Revenue from contracts with customers -- Amendments to IAS 12 Income taxes -- IFRS 16 Leases
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group, with the exception of the adoption of IFRS 16 Leases, which will replace the current leasing standard, IAS 17 Leases.
IFRS 16 requires all leases to be treated in a consistent way to the current rules on finance leases. This will result in all leases being disclosed in the Statement of Financial Position, with the exception of short-term leases, where, for lease terms of less than 12 months, an election can be made to account for the expense in line with the payment terms.
This is expected to have a significant impact on both the Group's Statement of Financial Position, as there will be an increase in lease assets and financial liabilities recognised, and the Group's Income Statement, through a changing of the expense profile and the financial statement lines in which the expenses are recognised. The adoption of IFRS 16 will increase the expense charged at the beginning of our lease contracts, due to the straight-line operating lease expense charge being replaced by the finance cost approach, which, by its nature is front-loaded. Currently, our operating lease rentals are recognised within administrative expenses, but under IFRS 16, these will be classified as finance costs and therefore operating profit is expected to increase on adoption. The financial impact of the changes have yet to be quantified by management.
2. Segmental information
IFRS 8 introduced the term Chief Operating Decision Maker (CODM). The Executive Management Team is considered to be the CODM and consists of the Chief Executive Officer, Chief Financial Officer, Strategy Director, HR Director, Marketing Director, Company Secretary, and the Regional Managing Director for each of our key regions.
ITE's reportable segments are strategic business units that are based in different geographic locations and managed separately. The products and services offered by each business unit are identical across the Group.
ITE Group evaluates performance on the basis of headline profit or loss from operations before tax.
The revenue and profit before tax 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 2017 Eastern & Southern
Unaudited Russia Central Asia Europe Asia Rest of the World Total Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
By geographical
location of
events/activities
Revenue 30,846 8,622 6,837 14,146 9,137 69,588
Headline pre-tax
profit/(loss) 11,252 1,941 1,672 7,729 (7,168) 15,426
Operating
profit/(loss) 10,637 1,700 (648) 4,322 (10,458) 5,553
________ ________ ________ ________ ________ _______
By origin of sale
Revenue 23,085 5,402 5,981 16,580 18,540 69,588
Headline pre-tax
profit/(loss) 6,509 1,064 622 8,576 (1,345) 15,426
Operating
profit/(loss) 5,894 823 (1,699) 5,169 (4,634) 5,553
________ ________ ________ ________ ________ _______
Operating profit 5,553
Investment revenue 1,592
Finance costs (4,015)
_______
Profit before tax 3,130
Tax 116
_______
Profit after tax 3,246
________
Capital expenditure 52 28 154 405 873 1,512
Depreciation and
amortisation 792 301 2,380 2,288 3,192 8,953
Balance Sheet
Assets * 49,434 14,543 36,872 131,598 82,860 315,307
________ ________ ________ ________ ________ ________
Liabilities * (40,962) (6,540) (29,269) (38,033) (83,011) (197,815)
________ ________ ________ ________ ________ ________
* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities.
The revenue in the period of GBP69.6 million includes GBP0.2 million of barter sales.
Included within the headline pre-tax loss and operating loss of Rest of the World is GBP8.0 million and GBP8.9 million respectively of corporate costs.
Six months ended
31 March 2016 Eastern & Southern
Unaudited Russia Central Asia Europe Asia Rest of the World Total Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
By geographical
location of
events/activities
Revenue 25,165 9,322 5,582 10,651 12,925 63,645
Headline pre-tax
profit/(loss) 10,421 2,956 394 6,107 (922) 18,956
Operating
profit/(loss) 8,157 2,724 (1,911) 4,726 (2,068) 11,628
________ ________ ________ ________ ________ _______
By origin of sale
Revenue 16,992 4,613 6,513 12,694 22,833 63,645
Headline pre-tax
profit 4,263 869 852 7,831 5,141 18,956
Operating
profit/(loss) 1,999 637 (1,453) 6,450 3,995 11,628
________ ________ ________ ________ ________ _______
Operating profit 11,628
Investment revenue 1,897
Finance costs (2,909)
_______
Profit before tax 10,616
Tax (967)
_______
Profit after tax 9,649
________
Capital expenditure 503 12 77 154 642 1,388
Depreciation and
amortisation 1,250 333 2,308 1,512 3,026 8,429
Balance Sheet
Assets * 36,586 12,471 42,205 125,011 84,108 300,381
________ ________ ________ ________ ________ ________
Liabilities * (17,378) (5,105) (27,454) (20,674) (118,464) (189,075)
________ ________ ________ ________ ________ ________
* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities
The revenue in the period of GBP63.6 million includes GBP0.3 million of barter sales.
Included within the headline pre-tax profit/(loss) and operating profit/(loss) of Rest of the World is GBP6.8 million and GBP5.7 million respectively of corporate costs. Included within the headline pre-tax profit and operating profit of Asia is GBP3.5m of profit from associates. Included within the operating profit of Russia is an impairment charge of GBP1.2 million in respect of Siberian goodwill.
Year ended
30 September 2016 Eastern & Southern
Audited Russia Central Asia Europe Asia Rest of the World Total Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
By geographical
location of
events/activities
Revenue 50,851 21,980 19,294 18,075 24,222 134,422
Headline pre-tax
profit/(loss) 20,316 7,309 5,855 4,888 (1,864) 36,504
Operating
profit/(loss) 17,074 6,841 1,217 (23,545) (3,918) (2,331)
________ ________ ________ ________ ________ _______
By origin of sale
Revenue 33,647 11,946 20,185 23,619 45,025 134,422
Headline pre-tax
profit 9,883 3,402 6,532 11,729 4,958 36,504
Operating
profit/(loss) 6,641 2,933 1,895 (16,703) 2,903 (2,331)
_______ ________ ________ ________ _______ _______
Operating loss (2,331)
Investment revenue 7,494
Finance costs (9,258)
_______
Loss before tax (4,095)
Tax (3,076)
_______
Loss after tax (7,171)
________
Capital expenditure 722 58 100 253 1,286 2,419
Depreciation and
amortisation 2,458 611 4,674 3,309 6,139 17,191
Balance Sheet
Assets * 46,054 12,110 41,013 102,479 84,361 286,017
________ ________ ________ ________ ________ ________
Liabilities * (26,208) (4,194) (25,951) (17,459) (106,210) (180,022)
________ ________ ________ ________ ________ ________
Non-current assets* 30,250 5,025 29,684 85,149 69,654 219,762
________ ________ ________ ________ ________ ________
* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities
The revenue in the year of GBP134.4 million includes GBP0.4 million of barter sales.
Included within the headline pre-tax profit/(loss) and operating profit/(loss) of Rest of the World is GBP13.1 million and GBP10.6 million respectively of corporate costs.
3. Adjusting items
The following (charges)/credits have been presented as adjusting items:
Six months to Six months to
31 March 2017 31 March 2016 Year ended 30 September 2016
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Operating items
Amortisation of acquired intangible assets (7,832) (7,603) (15,468)
Impairment of goodwill - (1,236) (24,650)
Impairment of investments in associates and joint
ventures - - (1,859)
Profit on disposal of investments - 1,497 1,498
Restructuring costs (2,347) - -
Transaction costs on completed and pending
acquisitions (184) (285) (330)
___________ ___________ ___________
Administrative expenses (10,363) (7,627) (40,809)
Tax on income from associates and joint ventures (1,140) (1,029) (1,078)
Financing items
Revaluation of liabilities on completed acquisitions (793) 316 1,288
Taxation
Tax related to adjusting items 2,442 1,368 2,905
Tax on income from associates and joint ventures 1,140 1,029 1,078
___________ ___________ ___________
(8,714) (5,943) (36,616)
___________ ___________ ___________
4. Taxation
Six months to Six months to
31 March 2017 31 March 2016 Year ended 30 September 2016
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Current tax
UK corporation tax 37 59 812
Foreign tax 2,064 1,981 5,682
__________ __________ __________
2,101 2,040 6,494
Deferred tax (2,217) (1,073) (3,418)
__________ __________ __________
Tax on profit on ordinary activities (116) 967 3,076
__________ __________ __________
Tax at the interim is charged on pre-tax profits, including those of associates and joint ventures, at a rate of 24% (2016: 18%) representing the best estimate of the weighted average annual corporation tax expected for the financial year adjusted for discrete items in the interim period.
5. Dividends
Six months to Six months to Year ended
31 March 2017 31 March 2016 30 September 2016
Unaudited Unaudited Audited
Per Settled in Settled in Per Settled in Per Settled in
share cash scrip share Settled in cash scrip share Settled in cash scrip
p GBP000 GBP000 p GBP000 GBP000 p GBP000 GBP000
Amounts
recognised as
distributions
to equity
holders in the
period:
Final dividend
in respect of
the year
ended 30
September
2016 3.0 5,350 2,497 - - - - - -
Interim
dividend in
respect of
the year
ended 30
September
2016 - - - - - - 1.5 3,158 720
Final dividend
in respect of
the year
ended 30
September
2015 - - - 4.9 12,436 - 4.9 12,436 -
______________ ______________ ______________ _____________ ___________________ _____________ ______________ ____________________ _____________
3.0 5,350 2,497 4.9 12,436 - 6.4 15,594 720
=== === ==== === ==== === === ==== ===
The Directors have proposed an interim dividend for the year ending 30 September 2017 of 1.5p per ordinary share, a distribution of approximately GBP3.9 million. The proposed dividend has been approved by the Board and has not been included as a liability as at 31 March 2017. A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares.
6. Earnings per share
The calculation of basic, diluted and headline diluted earnings per share is based on the following earnings and the numbers of shares:
Six months to Six months to
31 March 2017 31 March 2016 Year ended 30 September 2016
Number of shares ('000) Number of shares ('000) Number of shares ('000)
Unaudited Unaudited Audited
Weighted average number of shares:
For basic earnings per share 261,081 253,806 255,598
Dilutive effect of exercise of
share options 168 328 79
________ ________ ________
For diluted earnings per share 261,249 254,134 255,677
Basic and diluted earnings per share
The calculations of basic and diluted earnings per share are based on the profit for the financial year attributable to equity holders of the parent of GBP1.5 million (31 March 2016: GBP7.2 million; 30 September 2016: loss of GBP9.3 million). Basic and diluted earnings per share were 0.6p and 0.6p respectively (31 March 2016: 2.8p and 2.8p respectively; 30 September 2016: (3.6)p and (3.6)p respectively).
Headline earnings per share
The calculations of headline basic and diluted earnings per share are based on the headline profit for the financial year attributable to equity holders of the parent of GBP10.2 million (31 March 2016: GBP13.1 million; 30 September 2016: GBP27.3 million). Headline basic and diluted earnings per share were 3.9p and 3.9p respectively (31 March 2016: 5.2p and 5.2p respectively; 30 September 2016: 10.7p and 10.7p respectively).
7. Acquisition of businesses
Gehua
On 9 December 2016, ITE's wholly owned subsidiary, ITE Asia Exhibitions Limited, acquired a 70% holding in ITE Gehua Exhibitions Co Ltd ("Gehua"), a company incorporated in Shanghai, for consideration of GBP10.8 million.
Gehua is a Shanghai-based business, founded in 2001, that runs a portfolio of complementary exhibitions in China spanning Textile and Clothing, Auto Parts and Accessories, Mechanical Equipment, Gifts, and Food - attracting both domestic and international exhibitors and visitors.
During the period the Group incurred transaction costs on the Gehua acquisition of GBP0.1 million, which are included within administrative expenses.
Details of the fair values of the net assets acquired, and the goodwill arising, are presented as follows:
Fair value
Assets acquired GBP000
Intangible fixed assets - Trademarks (note 9) 2,983
Intangible fixed assets - Customer relationships (note 9) 4,451
Trade and other receivables 1,811
Cash and cash equivalents 343
Current liabilities (2,058)
Deferred tax liabilities (1,859)
5,671
Non-controlling interest (4,636)
----------
Net assets acquired 1,035
Goodwill arising on acquisition (note 8) 9,782
----------
Total cost of acquisition 10,817
----------
Satisfied by
Cash consideration 5,951
Share consideration 3,500
Contingent consideration 1,366
------
10,817
------
Net cash outflow arising on acquisition
Cash consideration paid 5,951
Cash and cash equivalents acquired (343)
------
5,608
------
The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within 12 months of the acquisition date.
Goodwill arising on acquisition of GBP9.8 million reflects the strategic value in increasing the Group's presence in China and the expected synergies with the Group's existing industry sectors and Chinese operations. None of the acquired goodwill and intangibles are expected to qualify for tax deductions in the UK.
The acquired business has contributed GBP0.9 million to Group revenue and a profit of GBP0.3 million since acquisition. If the acquisition had occurred on 1 October 2016 it would have contributed GBP2.2 million to revenue and GBP1.0 million to profit.
8. Goodwill
Total
GBP000
At 1 October 2016 97,855
Additions in the period (note 7) 9,782
Exchange differences 4,987
_________
At 31 March 2017 112,624
_________
9. Other intangible assets
Total
GBP000
At 1 October 2016 70,816
Additions through business combinations (note 7) 7,434
Additions 780
Disposals (1)
Amortisation of acquired intangibles (7,832)
Amortisation of computer software (528)
Exchange differences 377
_________
At 31 March 2017 71,046
_________
10. Interests in associates and joint ventures
Total
GBP000
At 1 October 2016 45,677
Share of results of associates and joint ventures 3,864
Dividends received (620)
Foreign exchange 803
_________
At 31 March 2017 49,724
_________
11. Trade and other receivables
31 March 31 March 30 September 2016
2017 2016 Audited
Unaudited Unaudited
GBP000 GBP000 GBP000
Trade receivables 37,171 25,022 32,499
Other receivables 3,708 5,391 3,634
Venue advances and prepayments 3,923 3,455 3,322
Prepayments and accrued income 14,669 10,793 11,155
___________ ___________ ___________
59,471 44,661 50,610
___________ ___________ ___________
12. Trade and other payables
31 March 31 March
2017 2016 30 September 2016
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade payables 2,210 2,176 2,699
Taxation and social security 1,925 1,294 2,776
Other payables 4,021 3,349 3,469
Accruals 9,365 7,658 8,075
Deferred consideration 1,777 1,161 1,654
Contingent consideration 1,923 1,221 2,171
___________ ___________ ___________
21,221 16,859 20,844
___________ ___________ ___________
13. Bank loan and overdraft
The bank loan is a GBP93.0 million multi-currency committed bank facility that provides revolving credit facilities through to 31 March 2019. Total drawdowns under the facility of GBP71.0 million at 31 March 2017 were denominated in Sterling (GBP68.1 million) and US Dollars (GBP2.9 million). At 31 March 2017 the Group had GBP22.0 million (March 2016: GBP9.9 million) of undrawn committed facilities.
All borrowings are arranged at floating interest rates, thus exposing the Group to interest rate risk. The Group uses interest rate swaps to mitigate this risk, hedging GBP40.0 million of the debt (31 March 2016: GBPnil; 30 September 2016: GBP40.0 million), reducing the exposure to fluctuations in interest rates. All borrowings are secured by a guarantee between a number of Group companies.
14. Derivative financial instruments
Derivative financial instruments are classified according to the following categories in the table below. The Group's derivative financial instruments are categorised into levels to reflect the degree to which observable inputs are used for determining their fair value. The Group's foreign currency forward contracts are classified as Level 2, while the equity and put options are classified as Level 3.
31 March 2017 31 March 2016 30 September 2016
Unaudited Unaudited Audited
Notional Fair value Notional Fair value Notional Fair value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Current assets
Foreign currency forward contracts 3,276 15 16,413 882 - -
Equity options 2,548 - - - - -
_________ _________ _________ _________ _________ ________
5,824 15 16,413 882 - -
Non-current assets
Foreign currency forward contracts 3,621 8 5,262 152 - -
Equity options 910 - 2,675 - 3,016 -
_________ _________ _________ _________ _________ ________
4,531 8 7,937 152 3,016 -
Current liabilities
Foreign currency forward contracts 15,346 1,356 4,162 231 22,177 1,284
Equity options 23,067 20,519 14,275 14,275 4,620 4,620
_________ _________ _________ _________ _________ ________
38,413 21,875 18,437 14,506 26,797 5,904
Non-current liabilities
Foreign currency forward contracts 12,285 802 14,057 896 23,427 1,976
Equity options 3,118 2,208 18,156 15,482 18,968 15,951
Interest rate swaps 191 191 - - 402 402
_________ _________ _________ _________ _________ ________
15,594 3,201 32,213 16,378 42,797 18,329
Level 1 fair values are measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair values are measured using inputs, other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. Level 3 fair values are measured using inputs for the asset or liability that are not based on observable market data.
For the Group's Level 3 financial instruments the fair values are determined using standard valuation models based on discounted cash flow projections. The fair values of unobservable inputs are sensitive to changes in discount rates and future cash flow projections.
The following table shows the movements in the Group's equity option liabilities during the period:
Total
GBP000
At 1 October 2016 20,571
Unwind of discount 1,572
Revaluation 530
Exchange differences recognised in other comprehensive income 54
_________
At 31 March 2017 22,727
_________
The Group utilises foreign currency forward contracts to hedge future euro denominated sales made from the UK. The Group is party to foreign currency forward 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 contracts, the Group has an obligation to sell Euros for Sterling at specified rates at specified dates.
The foreign currency forward contracts as at 31 March 2017 cover exchange exposures over the next 36 months. These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity.
15. Share capital
31 March 2017 31 March 2016
Unaudited Unaudited 30 September 2016
Audited
GBP000 GBP000 GBP000
Authorised
375,000,000 ordinary shares of 1 penny each (31 March 2016:
375,000,000; 30 September 2016:
375,000,000) 3,750 3,750 3,750
__________ __________ __________
Allotted and fully-paid
266,044,865 ordinary shares of 1 penny each (31 March 2016:
256,973,631; 30 September 2016:
262,139,673) 2,660 2,570 2,621
__________ __________ __________
During the period, the Group issued 2,299,379 shares of 1p each as part of the consideration paid to acquire a 70% shareholding in Gehua. The Company announced a scrip dividend alternative for the year ended 30 September 2016 final dividend, allowing shareholders to elect to receive their dividend in the form of new ordinary shares. As a result of this, 1,605,813 new ordinary shares of 1p each were issued. During the period, no ordinary shares of 1p each (2016: nil) were allotted pursuant to the exercise of share options.
The Company has one class of ordinary shares which carry no right to fixed income.
16. Events after the balance sheet date
There were no material events occurring after the balance sheet date.
17. 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 with key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2017. Transactions between the Group and its associates, where relevant, are disclosed below.
Trading transactions with associates
During the period ended 31 March 2017 the Group charged management fees of GBP0.2 million (2016: GBPnil) to Sinostar ITE, the Group's joint venture operation in Hong Kong and China.
18. Principal risks and uncertainties
The following principal risks and uncertainties disclosed in the 2016 Annual Report have not changed during the period:
-- Political uncertainty and regulatory risk -- Economic instability reduces demand for exhibition space -- Financial risk - foreign currency risk -- Financial risk - liquidity risk -- Financial risk - covenant risk -- Commercial relationships -- Venue availability -- Competitor risk -- Integration and management of acquisitions -- People
Refer to pages 43-46 of the 2016 Annual Report for details of the potential impact and mitigating actions in place for each of these risks.
In addition to the above risks, one additional risk has been identified in the period, as follows:
Business Transformation Risk
Potential Impact
Today the Group begins a significant transformation programme aimed at transforming the nature and focus of the business. As with any transformation programme, the nature, scale, processes, information technology and people will at times be significantly impacted and changed. This brings with it a significant level of execution risk, which may lead to either delay or increased cost of the programme.
Mitigation
The risk of delay and increased costs of the programme are mitigated by the Transformation Steering Committee and processes implemented by the management team. This is chaired by our Director of Transformation, who has significant relevant experience of change and brings together key individuals from across the business to monitor the programme. Further the Board and Executive Management Team have significant oversight of the programme.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Interim Management Report. The financial position of the Group, its cash flows and liquidity position are described in the financial statements and notes. The Group has the financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. The Group operates in territories that can be unpredictable and unexpected geopolitical and economic events such as attempted coups, acts of terrorism, sanctions, currency controls and exchange rate movements can have an impact on the Group's reported trading performance. A significant deterioration in trading from the major markets (notably Russia and Turkey) could impact on certain banking covenants. However, the Directors have a range of mitigating actions available and within their control. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of interim financial statements, which have been prepared in accordance with IAS 34 "Interim Financial Reporting" give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact, and description of principal risks and uncertainties for the remaining six months of the financial year); and
(c) the interim management report includes a fair review of the information required regarding related party transactions (under DTR 4.2.8R).
By the order of the board
Chief Executive Officer
Mark Shashoua
16 May 2017
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 2017 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of financial position, the condensed consolidated cash flow statement and related notes 1 to 18. 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 (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 it 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 Kingdom's Financial Conduct 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 2017 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 Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
16 May 2017
Directors and professional advisers
Directors Marco Sodi, non-executive Chairman
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
Neil England, non-executive Director
Linda Jensen, non-executive Director
Stephen Puckett, non-executive Director
Sharon Baylay, non-executive Director
Company Secretary Anneka Kingan
Registered office ITE Group plc, 105 Salusbury Road, London, NW6 6RG
Registration number 1927339
Auditor Deloitte LLP, 2 New Street Square, London, EC4A 3BZ
Solicitors Olswang, 90 High Holborn, London, WC1V 6XX
Principal Bankers Barclays Bank plc, 1 Churchill Place, London, E14 5HP
HSBC Bank plc, 60 Queen Victoria Street, London, EC4N 4TR
Company Brokers Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London,
EC4M 7LT
Registrars Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
Public Relations FTI Consulting Limited, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD
Website www.ite-exhibitions.com
Financial calendar
The Group's financial calendar can be found at http://www.ite-exhibitions.com/Financial-Calendar.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BCGDUDUBBGRU
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May 16, 2017 02:01 ET (06:01 GMT)
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