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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 : 0441O
ITE Group PLC
15 May 2018
15 May 2018
ITE GROUP PLC
("ITE" or the "Group")
INTERIM RESULTS ANNOUNCEMENT
Transformation and Growth Programme ("TAG") underpins strong organic revenue growth
Proposed acquisition of complementary market leading events from Ascential plc for GBP300m
Financial highlights
Hot Features
Premium
Six months to Six months to
31 March 2018 31 March 2017
Volume sales 353,300 m(2) 325,200 m(2)
Revenue GBP75.4m GBP69.6m
Headline profit before tax(1) GBP16.0m GBP15.4m
Profit before tax GBP1.3m GBP3.1m
Headline diluted earnings per share(2) 3.7p 3.9p
Diluted earnings per share (0.7p) 0.6p
Interim dividend per share 1.5p 1.5p
Net debt(3) GBP51.2m GBP55.2m
-- First year of like-for-like(4) growth in volume and yields since 2014
-- Revenue of GBP75.4m; growth of 8% on a like-for-like basis, driven by early TAG initiatives, focus on Core events and the majority of markets returning to like-for-like revenue growth
-- Four top 10 events ran in the period and together delivered double digit like-for-like revenue growth
-- Headline profit before tax ("Headline PBT") of GBP16.0m; statutory profit before tax of GBP1.3m
-- Growth of 2% on a like-for-like basis in headline PBT reflects reinvestment into future events
-- Continued strong cash generation from sales initiatives and reduced net debt by 7% to GBP51.2m
-- Maintained interim dividend of 1.5p, in line with policy
-- Forward bookings(5) of GBP144 million already contracted for FY18; 2019 forward bookings up 31% on a like-for-like basis
Strategy update
-- Early TAG initiatives and focus on Core(6) events is driving performance -- Most markets have now returned to growth - continued good progress in Moscow
-- Completed negotiations to move Mosbuild to Russia's largest exhibition venue on a long term basis
-- TAG investment is on track, expenditure within budget
-- Continued progress in managing the portfolio, including the disposal of TradeLink ITE Sdn. Bhd ("TradeLink") for GBP4.2m
Proposed acquisition of Ascential Events Limited
-- Proposed acquisition of seven market leading and scalable event brands -- Expected to be earnings enhancing in first full year of ownership -- Cost synergies achievable net of investment -- Strong scope for growth under ITE management as part of Core portfolio -- Diversifies ITE's revenue by geography and product -- Addition of market leading brands supports and accelerates the delivery of ITE's vision
-- Standby underwriting entered into with Investec Bank plc in respect of the proposed rights issue to fund the acquisition
Mark Shashoua, CEO of ITE Group plc, commented:
"We are seeing the benefits from a number of our early initiatives in the TAG programme which has driven a return to revenue growth in most of our markets. Overall, revenues were up 8% on a like-for-like basis and, encouragingly, the focus on operational rigour on our Core events delivered the first like-for-like volume and yield growth since 2014. Consistent with this, the four top 10 shows that took place during the first half collectively delivered double digit revenue growth.
Today we have also announced the proposed acquisition of seven highly complementary market leading events from Ascential plc. These events are well known to us, the acquisition is in line with our product-led acquisition strategy and gives us the benefit of a more balanced portfolio by geography and product. It also adds two more global brands in BETT and CWIEME and is expected to be earnings enhancing in 2019, our first full financial year of ownership.
As a result of our focus on forward bookings we have good visibility into this year and next with revenues booked for 2018 at 89% of consensus for the full year and, on a like-for-like basis, bookings for 2019 are up 31% at GBP31.0m. The combination of good progress on TAG and the proposed acquisition of Ascential Events Limited represent the significant steps for ITE in realising its vision of creating the world's leading portfolio of content-driven, must-attend events that deliver an outstanding experience and ROI for our customers."
The acquisition is conditional, inter alia, on obtaining shareholder approval and the completion of a proposed rights issue which will be launched in due course. Further details can be found in the separate announcement on the acquisition also issued today.
1. Headline profit before tax 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. Net debt is defined as cash and cash equivalents after deducting bank loans.
4. Like-for-like results are stated on a constant currency basis, after excluding events which took place in the current period but did not take place under our ownership in the comparative period and after excluding events which took place in the comparative period but did not take place under our ownership in the current period. For clarity, this excludes all:
- Biennial events;
- Timing differences (i.e. events that ran in only one of the current or comparative periods, due to changes in the event dates);
- Launches;
- Cancelled or disposed of events that did not take place under our ownership in the current year;
- Acquired events in the current period; and
- Acquired events in the comparative period that didn't take place under our ownership in the comparative period (i.e. they took place pre-acquisition).
See 'Trading highlights and review of operations' for further detail.
5. Forward bookings are contracted revenues for the years ending 30 September 2018 and 30 September 2019. These are the bookings as at 11 May 2018, unless otherwise stated.
6. Core events are those of strategic importance to our future and include the Group's largest events, those with the greatest potential for growth and a number of smaller but strategically important events. Following the strategic review, the Group deliberately segmented its business into Core and Non-Core, enabling management to increase its focus on events that present the greatest opportunities whilst reducing distraction from smaller events.
Enquiries:
Mark Shashoua, Chief Executive Officer Andrew Beach, Chief Financial Officer Melissa McVeigh, Director of Communications ITE Group plc 020 7596 5000 Charles Palmer / Emma Hall / Harry Staight FTI Consulting 020 3727 1000 Nick Westlake / Toby Adcock Numis 020 7260 1000
About ITE Group plc
ITE Group plc was founded in 1991 and is now one of the world's leading organisers of international exhibitions and conferences.
ITE Group's strategic vision is to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers. In May 2017 the Group launched its Transformation & Growth (TAG) programme, which is designed to transform the Company from a geographic-led business to a product-led business that focuses on market-leading events, wherever they are in the world. ITE strives to run the best shows and offer the best service to its customers throughout the world regardless of location. By putting exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth for our shareholders.
ITE Group is a public limited company and has been listed on the main market of the London Stock Exchange since 1998.
Executive summary
ITE has delivered a strong overall trading performance as we start to see the benefits of our early TAG programme initiatives coming through. This was the first period of like-for-like growth in both yield and volume since 2014 and these results reflect revenue growth in the majority of our markets as a result of our early TAG initiatives and focus on our Core events.
Revenues of GBP75.4m (2017: GBP69.6m) for the first six months are 8% higher than the same period last year on a like-for-like basis. This was as a result of improved like-for-like trading (GBP6.2m), driven by strong performances across several markets with volume growth achieved in Russia, Asia, Central Asia and Eastern & Southern Europe. Revenue growth was also supported by the benefit of biennials and event timing differences (GBP4.3m) and a small positive impact from the acquisition of the Gehua portfolio of events in China, which completed during the previous year (GBP0.5m, net of other event disposals). This was offset by the adverse impact from foreign exchange (GBP3.5m) and the cancellation of 22 of our less profitable events in line with our strategy (GBP1.6m, net of launches).
Despite the revenue impact of the net cancellations and costs associated with the TAG programme, headline profits before tax of GBP16.0m are 4% higher than the same period last year. The increase is due to the positive impact of biennial events and timing differences (GBP2.4m), net acquisitions (GBP0.4m) and foreign exchange (GBP0.2m). This was offset by the impact of ongoing investment in the TAG programme (GBP2.7m). Because of the positive top line performance and continued growth at Sinostar (our Chinese joint venture), we have been able to make additional investments into future events, spending GBP1.5m more than at this stage in the comparative period. Despite these reinvestments, headline profit before tax grew by 2% on a like-for-like basis.
Reported profits before tax were GBP1.3m (2017: GBP3.1m). This is after including GBP2.3m of one-off costs relating to the TAG Programme (2017: GBPnil). This takes our total spend, recognised in the income statement, on one-off TAG costs to GBP6.9m since the launch of the programme, which is slightly less than previously indicated, due to timing.
Russia, a significant part of our business, has delivered a strong performance, ahead of market growth following the decision to allocate the largest proportion of TAG investment into the region. Like-for-like volumes were 6% higher than this time last year, following a strong performance across the Core Moscow portfolio and at the Core agriculture event in Krasnodar, Yugagro.
Whilst there has been an increase in political tensions between Russia and the West, there has been a negligible effect on both results to date and forward bookings. It is important to note that the effects of the sanctions in 2014 have meant that exposure to US/UK companies attending our Russian events is very small, accounting for just GBP0.4m (0.3%) of Group revenues in 2017. Through our strong sales operations in certain international markets we are experiencing growth in particular from Chinese and Turkish exhibitors.
In other regions, we delivered like-for-like revenue growth across all regions in Asia and our Chinese joint venture Sinostar performed well, contributing GBP6.7m to profitability. On a like-for-like revenue basis both Turkey and Ukraine experienced double-digit growth. In Turkey this represents just one event - the EMITT travel show - which returned to growth this year, following management attention and operational improvements delivered as part of the TAG programme.
We have recently rolled out improved content at our Core shows in Moscow, Istanbul and across the Brands portfolio, and exhibitor NPS scores are on average up by 10 points. Core buying groups and revisits (which is a key indicator of quality audiences returning throughout the show and staying longer) are both up.
This has led to increased levels of rebooking for 2019 where we are 31% ahead of this time last year on a like-for-like volume basis, with bookings at GBP31m (2017: GBP27m).
As at 11 May 2018, the Group has contracted GBP144m of revenue for the current financial year which is 13% ahead of last year on a like-for-like basis. This is partly due to bookings being made earlier as a result of a focused sales effort on Core events, and gives the Group much improved visibility, which represents 89% of consensus.
Strategic Update - TAG programme
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. ITE strives to run the best shows and offer the best service to its customers throughout the world, regardless of location. 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.
Following the announcement of our TAG programme a year ago, our early TAG initiatives are progressing according to plan, within budget and already driving strong organic revenue growth. 2018 is about rigorous attention to detail and execution of our plan.
The TAG Programme comprises of three pillars of strategic activity to drive revenue and accelerate growth.
-- Create a scalable platform to generate real organic growth; -- Actively manage our portfolio; and -- Make selective product-led acquisitions.
Create a scalable platform
Organic revenue growth is being delivered by directing TAG investment towards five transformational levers by creating best practice functions and teams, investing in show operations, building capability and talent, driving a performance culture and building and maintaining a fit for purpose IT infrastructure and systems.
Creating a strong operational Head Quarters in order to instil best practice across each area of our business is imperative to our transformation. Having recruited the Heads of Best Practice we now have the team in place to deliver our transformation. To ensure that our shows are consistently run at the same level of excellence anywhere in the world we have implemented the 'ITE way' and rolled out multiple best practice initiatives following the launch of our 'Events Best Practice' blueprints. We are committed to rolling out blue prints for every activity associated with running a successful events business.
Our main focus for TAG in 2018 is on content, lead generation and customer service. During the period, ITE has started to deliver events with much richer content in order to attract new visitors and drive retention. Initiatives have had an immediate impact. For example, EMITT, the East Mediterranean International Tourism and Travel Exhibition show grew double digit revenues on like-for-like basis and rebooked 45% of 2018 revenues for the 2019 event onsite. This is a significant achievement as many of the customers are national tourist boards whose budgets are typically only set later in the calendar year. Our focus on onsite rebooking at a number of Core events continues to strengthen our sales visibility.
To ensure the Group becomes more efficient, work is underway to put in place common systems to deliver a better service across the world to ITE's customers. A new CRM and HR system is set to be launched this year with a new marketing system to be rolled out over the next 18 months, while we are in the early stages of designing our new global finance system.
Clear progress has been made during the first half of the year across the five levers and the Group is on track with its 2018 milestones:
Transformational Benefit 2018 Milestones
Lever
Create best
practice * Deliver best-in-class processes implemented globally * Completed the design of the 'ITE way'
functions and across the Group, greater efficiency via standardised
teams processes, a more structured and accountable
leadership, and a globally consistent 'ITE way' * Implementation has begun of the 'ITE way'
driving efficiency and greater attendee experience
---------------------------------------------------------------- ---------------------------------------------------------------
Invest in show
operations * Enhance customer retention and exhibitor reach, * Regional customer success teams have been started
obtain enriched data insights and improve operational
efficiency
* Dedicated regional content teams have been formed
* Implementation of value-based pricing methods has
been started
* Show 'blueprints' have been rolled out
* New show content has begun to be deployed in Core
shows e.g. MITT, MosBuild
---------------------------------------------------------------- ---------------------------------------------------------------
Build capability
and talent * Attract and retain talent, develop internal * Dedicated specific training programmes have been
capabilities, and establish the right capabilities to rolled out for Sales teams
drive business and adapt to market changes
* All key Regional Directors have been recruited
---------------------------------------------------------------- ---------------------------------------------------------------
Drive a * Standardisation of performance management is ongoing
performance * Create a values-driven organisation that encourages
culture high performance and rewards success and talent,
building a winning team with an aspirational culture
---------------------------------------------------------------- ---------------------------------------------------------------
Build and
maintain fit for * Create a global IT function and infrastructure that * Integrated sales and marketing systems have been
purpose IT can support the requirements of a flexible, mobile launched
infrastructure and highly effective workforce that operates globally,
and systems but delivers locally, and supports and enables the
'ITE way' of working * Systems design and development has been completed for
Marketing and HR and in the early stages of design
for Finance
* Systems to be deployed in phased waves
---------------------------------------------------------------- ---------------------------------------------------------------
Actively manage the portfolio
The Group continues to manage its portfolio by implementing a more rigorous approach to the allocation of capital. Under current management, since October 2016, in line with the aims of the TAG programme, we have discontinued 59 less profitable events as we continue to focus on our Core events. Despite these closures, revenues have grown.
Post period end, the Group recognised a profit on disposal, having sold TradeLink, the owner of Metaltech, the metalworking exhibition in Malaysia, to UBMMG Holdings Sdn. Bhd., a subsidiary of UBM plc for a total cash consideration of MYR 23m (GBP4.2m). This transaction marks a further step towards this second element of TAG to manage our portfolio of events and the proceeds will be reinvested into the Group.
Having deliberately segmented our business into Core and Non-Core, management is able to increase its focus on events that present the greatest opportunities whilst reducing distraction from smaller events. The Group continues to apply the transformational levers to its Core events to realise their full potential and each segment of the portfolio requires a different degree of focus and different transformational levers to maximise its growth.
In line with its product-led strategy, the Group will continue to pro-actively review its portfolio on an ongoing basis and will review its options if too much time or investment is involved to deliver expected target growth.
Product-led acquisitions
The third TAG pillar is for the Group to make selective product-led acquisitions to accelerate growth in line with its strict M&A criteria. Each opportunity will be carefully reviewed, but will not be limited to any particular geography as the Group aims to run the best shows in the best industries anywhere in the world. These product led acquisitions would also benefit from the best practice teams that are now in place so that standardisation of processes would drive further organic growth post acquisition.
A pipeline of product-led opportunities is building, but the Group will only proceed if such opportunities meet most of the following criteria:
-- Scalability - in sectors with high growth potential -- A distinct customer value proposition - serving a clear part of an industry sector -- Position in attractive markets for events - serving a high growth underlying market -- Evidence of strong organic revenue growth and profit margins -- Potential to roll out internationally - dependent on the product -- Earnings accretive - offering a good return on invested capital
The Directors believe that the Ascential Exhibitions Business is an attractive, high-quality portfolio of 'must-attend' exhibitions. The Acquisition aligns with ITE's continuing TAG Programme and specifically its strategy of making product-led acquisitions of scalable events brands which are seen as offering strong growth potential under ITE's ownership.
The proposed acquisition will diversify ITE's exposure to some end-market verticals such as education technology and coil winding, electric motor and transformer manufacturing technologies that the Directors believe are attractive and supported by structural growth drivers, creating a more balanced portfolio of events.
The proposed acquisition will also diversify ITE's geographic footprint, giving rise to further opportunities for growth. In particular, the Directors believe that following the proposed acquisition, Bett and CWIEME will benefit from the leveraging of ITE's wider geographic footprint and existing infrastructure, providing geo-cloning opportunities.
Outlook
The TAG programme is delivering early benefits with improved financial performance from our Core events delivering like-for-like volume, revenue and headline PBT growth for the first time in four years.
Cash conversion remains strong and the Group enters the second half with high visibility of revenues having contracted GBP144m of revenue for the current financial year as at 11 May 2018, representing circa 89% of market expectations for the full year. As a result of our focus on forward bookings, the Group has also already contracted GBP31m of forward bookings for FY2019, representing 19% of consensus revenue. This is up 31% on a like-for-like basis and the improved level of bookings partly reflects the Group's focused sales initiatives on Core events, in line with its strategy.
The like-for-like growth and cash conversion have allowed management to invest GBP1.5m more in future period events than at this stage last year.
The combination of good progress on TAG and the proposed acquisition of Ascential Events Limited - a portfolio of market leading products that the management of ITE have known for a long time and that fit well with our strategy means that ITE is taking significant steps towards realising its vision of creating the world's leading portfolio of content-driven, must-attend events that deliver an outstanding experience and ROI for our customers.
Mark Shashoua
Chief Executive Officer
Financial performance
Statutory results
Revenues for the first six months of the year were GBP75.4m (2017: GBP69.6m). Revenue is up GBP5.8m, 8% ahead of the comparative period. Revenue in the period has benefited from the timing impact of our Breakbulk North America event which took place in October of the current year but did not occur in the previous financial year and the impact of this being our stronger biennial year.
The impact of foreign exchange rates has had an adverse impact of GBP3.5m on the translation of revenue into sterling when compared to the prior period, but has had a GBP0.2m positive impact on profits. This is due to a natural hedging of costs in the same currencies which reduces the GBP3.5m revenue impact to GBP0.6m at a profit level, which is more than offset by higher gains recognised this year as a result of balance sheet retranslations which resulted in a foreign exchange gain of GBP0.6m compared to a loss of GBP0.2m in the comparative period.
The average exchange rates over the first six months of the year were:
Six months ended 31 March 2018 Six months ended 31 March 2017 Movement
Russian ruble 78.3 75.6 +4%
------------------------------- ------------------------------- ---------
Turkish lira 5.2 4.3 +21%
------------------------------- ------------------------------- ---------
Indian rupee 87.6 83.3 +5%
------------------------------- ------------------------------- ---------
Euro 1.13 1.16 -3%
------------------------------- ------------------------------- ---------
Profit before tax was GBP1.3m (2017: GBP3.1m). This is after including non-underlying restructuring costs of GBP4.1m (2017: GBP2.4m) incurred primarily as part of the TAG programme (GBP2.3m, 2017: GBPnil), with the remaining GBP1.8m (2017: GBP2.4m) incurred in relation to redundancies and other costs necessary to ensure our divisions are appropriately structured to realise the benefits of TAG, and the accelerated amortisation charge relating to our previous debt facility on completion of the refinancing in November 2017 (GBP0.6m). One-off costs of GBP2.2m (2017: GBPnil) were also recognised on cessation of trading at our UK publishing business as we focus on our Core event portfolio.
Diluted earnings per share for the first six months were (0.7)p (2017: 0.6p). The decrease in earnings per share is largely due to the one-off costs of the TAG programme, but is also in part due to a higher proportion of profits being generated in subsidiaries that are not wholly-owned, increasing the profits attributable to non-controlling interests, 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.
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. 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 comparison across the industry. The adjusting items presented are consistent with those presented in the previous year.
Headline profit before tax for the first six months of the year was GBP16.0m (2017: GBP15.4m). Headline profit before tax was up 2% on a like-for-like basis, even after increased reinvestment in our Core events, some of the benefit of which will not be realised until future periods. The results were also positively impacted by GBP2.4m as a result of biennial and event timing differences and by GBP0.4m due to the first time impact of net acquisitions all contributing to an increase, offset by planned TAG costs of GBP2.7m included in headline results.
Headline diluted earnings per share for the first six months was 3.7p (2017: 3.9p), reflecting the change in profit mix between wholly-owned and not wholly-owned consolidated entities and the increase in the Group's effective tax rate.
The following table reconciles statutory profit/(loss) before tax to headline profit before tax:
Six months Six months Year ended
to 31 March to 31 March 30 September
2018 2017 2017
GBPm GBPm GBPm
Profit/(loss) on ordinary activities
before taxation 1.3 3.1 (3.2)
Operating items
Amortisation of acquired intangible
assets 5.8 7.8 14.1
Impairment of goodwill - - 12.6
Impairment of investments in associates
and joint ventures - - 1.7
Derecognition of goodwill on cessation
of trading 2.2 - -
Restructuring costs
* TAG 2.3 - 4.6
* Other 1.8 2.4 0.4
Transaction costs on completed and
pending acquisitions 0.7 0.2 0.4
Loss on disposal of investments - - 3.7
Tax on income from associates and
joint ventures 1.5 1.1 1.5
Financing items
Revaluation of liabilities on completed
acquisitions 0.4 0.8 (4.2)
__________ __________ __________
Headline profit before tax 16.0 15.4 31.6
Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. Derecognition of goodwill on cessation of trading relates to the closure of the publishing arm of our UK fashion business. Restructuring costs are the costs incurred in designing and implementing the Group's strategy, and includes GBP2.3m specifically related to the TAG programme. The remaining GBP1.8m of restructuring costs relates primarily to redundancy costs within a number of divisions to ensure the businesses are fit for purpose going forwards under the current leadership, and accelerated amortisation of banking facility fees as part of the refinancing undertaken in November to support the Group's strategic aims under the TAG programme. Transaction costs on completed and pending acquisitions relates to costs incurred in pursuing acquisition and divestment opportunities as part of the TAG programme pillars; to actively manage our portfolio and to make selective product-led acquisitions. 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 gains from the revaluation of our equity options over non-controlling interests in our subsidiaries (credit of GBP0.5m), principally in relation to the remaining 30% interest in ITE Ebseek, the January 2016 acquisition of the industrial fasteners event in China, and the imputed interest charge on the unwinding of the discounting on the Group's equity option liabilities (charge of GBP0.9m).
Cash flows
The Group's cash flow generated from operations over the first six months was GBP12.1m (2017: GBP21.8m) which after adjusting for the non-cash foreign exchange gain of GBP0.6m (2017: loss of GBP0.2m) and net venue utilisation of GBP1.5m (2017: net utilisation of GBP0.4m) represents operating cash conversion(1) of 88%. Cash conversion in the first half is lower than the full year forecast cash conversion as a result of the six month period to 31 March being the stronger half for our associate and joint venture entities, the profits of which are recognised in the period, ahead of the dividends which are received in the second half. The year on year movement in cash flow generated from operations is largely the result of working capital movements. Net debt at 31 March 2018 has reduced to GBP51.2m (2017: GBP55.2m). This has been achieved despite significant investment in the TAG programme over the last 12 months.
During the period there was a refinancing of the Group's external debt facility which was completed on 22 November 2017 and gives the Group access to a new GBP100m facility from a syndicate of four banks: HSBC, Barclays, Citibank and Commerzbank. The facility amortises by GBP10m each year and expires in November 2021.
2018 interim Dividend
The Board has announced an interim dividend of 1.5p (2017: 1.5p).
(1) Defined as cash generated from operations adjusted for net venue utilisation, expressed as a percentage of Headline PBT adjusted for non-cash foreign exchange gains/losses: (Cash generated from operations (GBP12.1m) + net venue utilisation (GBP1.5m))/(Headline PBT (GBP16.0m) - FX gain (GBP0.6m)) = 88%
Trading highlights and review of operations
During the period the Group organised 99 events (2017: 122 events) which generated revenue growth of 8%. Like-for-like revenues were also 8% higher than for the same period last year.
Volume sales for the period were 353,300 sqm (2017: 325,200 sqm), reflecting the return to like-for-like volume growth (up 3%) for the first time since 2014, the stronger biennial pattern and timing changes.
A summary of the Group's revenue and gross profits for the period is set out below.
Volume Sales Revenue Gross Profit
sqm'000 GBPm GBPm
First half 2017 325 69.6 27.6
------------- -------- -------------
Biennial (10) (1.9) (0.9)
------------- -------- -------------
Timing (11) (2.0) (1.3)
------------- -------- -------------
Non-recurring (21) (2.9) (0.4)
------------- -------- -------------
Disposals - (0.7) (0.1)
------------- -------- -------------
Annually recurring 2017 283 62.1 24.9
------------- -------- -------------
Acquisitions 9 1.1 0.6
------------- -------- -------------
Launches 11 1.3 0.5
------------- -------- -------------
FX Translation - (3.5) (1.3)
------------- -------- -------------
TAG costs - - (1.0)
------------- -------- -------------
Like-for-like change 9 6.2 (0.1)
------------- -------- -------------
Annually recurring 2018 312 67.2 23.6
------------- -------- -------------
Timing 17 3.9 2.9
------------- -------- -------------
Biennial 24 4.3 1.6
------------- -------- -------------
First half 2018 353 75.4 28.1
------------- -------- -------------
Russia
Like-for-like volume sales were 6% higher than the comparative period, driven by Moscow and the Core agriculture event in Krasnodar, Yugagro.
Moscow's largest event in the first half was the Moscow International Travel & Tourism (MITT) event, which increased volume sales to 14,100 sqm (2017: 13,700 sqm) reflecting further returns of Turkish exhibitors and an increase in other international and domestic stands.
Asia
Like-for-like volume sales for the first six months in Asia were 1% higher than the comparative period.
India has had a strong half year with the majority of the events having now taken place. Acetech Mumbai is the largest construction event in India and saw volumes increase by 4% to 28,800 sqm from 27,800 sqm. The recent acquisitions in China have seen strong revenue growth although required investment.
Central Asia
Trading in Central Asia has returned to growth with like-for-like volume sales for the first six months 10% higher than for the comparative period.
The largest part of the Group's business in the region is Kazakhstan, which reported a 15% increase in like-for-like volume sales, underpinned by the oil price which helps to drive the local economy.
Eastern & Southern Europe
The only Turkish event that took place in the first half was EMITT. Volumes were marginally down at 22,300 sqm (2017: 23,300 sqm), as anticipated following a strategic decision to focus on yield increases. This decision was vindicated by like-for-like double digit revenue growth.
Ukraine grew like-for-like volumes by 14%.
Brands
Africa Oil Week ran in October 2017 and performed in line with the previous edition, in spite of the impact of sustained low oil prices through 2017. Delegate numbers were broadly the same year on year and this led to revenues being maintained at the levels seen in the comparative period.
The Breakbulk Americas event also ran in October, but did not feature in the 2017 results as it last ran in September 2016. Compared to the previous edition the event delivered 7% volume growth to 5,500 sqm (2016: 5,200 sqm). The largest event in the portfolio, Breakbulk Europe is due to take place in the second half of the year, and forward bookings are ahead of this time last year.
Trading has been challenged at the mid-market focused fashion event, MODA, held at the NEC in Birmingham with volumes falling 17% to 12,000 sqm (2017: 14,400 sqm).
April trading
April is the largest trading month for the Group. Mosbuild has benefitted from the increased sales and marketing focus, resulting in volume improvement from 34,300 sqm last year to 35,900 sqm this year.
Set out below are the results for the Group's principal events taking place in April 2018:
2018 (sqm) 2017 (sqm) Variance (%)
Mosbuild (Russia) 35,900 34,300 +5%
----------- ----------- -------------
TransRussia (Russia) 8,800 7,400 +19%
----------- ----------- -------------
ExpoElectronica (Russia) 8,600 8,200 +5%
----------- ----------- -------------
Beauty Eurasia (Turkey) 6,100 6,000 +2%
----------- ----------- -------------
Secutech (India) 5,600 6,200 -10%
----------- ----------- -------------
Mining World Russia (Russia) 5,300 4,100 +29%
----------- ----------- -------------
Principal risks and uncertainties
The following principal risks and uncertainties disclosed in the 2017 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 -- Transformation and Growth (TAG) programme
Refer to pages 50-53 of the 2017 Annual Report for details of the potential impact and mitigating actions in place for each of these risks.
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 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 adversely impact the Group's results, but following the refinancing completed during the period, headroom on the Group's banking covenants has significantly increased. The Directors also 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. 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
15 May 2018
Condensed Consolidated Income Statement
For the six months ended 31 March 2018
Six months to 31 March Six months to 31 March Year ended 30 September
2018 (Unaudited) 2017 (Unaudited) 2017 (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 75,362 - 75,362 69,588 - 69,588 152,623 - 152,623
Cost of sales (47,217) - (47,217) (42,016) - (42,016) (93,259) - (93,259)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Gross profit 28,145 - 28,145 27,572 - 27,572 59,364 - 59,364
Other operating
income 183 - 183 333 - 333 741 - 741
Administrative
expenses (18,127) (12,844) (30,971) (15,607) (10,363) (25,970) (32,194) (37,445) (69,639)
Foreign exchange
gain/(loss)
on operating
activities 555 - 555 (246) - (246) 337 - 337
Share of results of
associates
and joint ventures 6,665 (1,526) 5,139 5,004 (1,140) 3,864 6,510 (1,504) 5,006
_________ _________ _________ _________ _________ _________ _________ _________ _________
Operating
profit/(loss) 17,421 (14,370) 3,051 17,056 (11,503) 5,553 34,758 (38,949) (4,191)
Investment revenue 399 537 936 283 1,309 1,592 688 5,342 6,030
Finance costs (1,774) (929) (2,703) (1,913) (2,102) (4,015) (3,824) (1,178) (5,002)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) before
taxation 16,046 (14,762) 1,284 15,426 (12,296) 3,130 31,622 (34,785) (3,163)
Tax on profit/(loss) 4 (4,285) 2,977 (1,308) (3,466) 3,582 116 (8,315) 5,063 (3,252)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Profit/(loss) for the
period 11,761 (11,785) (24) 11,960 (8,714) 3,246 23,307 (29,722) (6,415)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Attributable to:
Owners of the
Company 9,992 (11,785) (1,793) 10,208 (8,714) 1,494 21,476 (29,722) (8,246)
Non-controlling
interests 1,769 - 1,769 1,752 - 1,752 1,831 - 1,831
_________ _________ _________ _________ _________ _________ _________ _________ _________
11,761 (11,785) (24) 11,960 (8,714) 3,246 23,307 (29,722) (6,415)
_________ _________ _________ _________ _________ _________ _________ _________ _________
Earnings per share
(p)
Basic 6 3.7 (0.7) 3.9 0.6 8.2 (3.1)
Diluted 6 3.7 (0.7) 3.9 0.6 8.1 (3.1)
_________ _________ _________ _________ _________ _________ _________ _________ _________
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 2018
Six months to Six months to
31 March 2018 31 March 2017 Year ended 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
(Loss)/profit for the period attributable to
shareholders (24) 3,246 (6,415)
Cash flow hedges:
Movement in fair value of cash flow hedges 1,447 1,336 1,336
Fair value of cash flow hedges released to the
income statement (446) (387) (675)
Currency translation movement on net investment
in subsidiary undertakings (3,059) 5,276 (2,976)
__________ __________ __________
(2,082) 9,471 (8,730)
Tax relating to components of comprehensive income (141) (290) (222)
__________ __________ __________
Total comprehensive income for the period (2,223) 9,181 (8,952)
__________ __________ __________
Attributable to:
Owners of the Company (3,992) 7,429 (10,783)
Non-controlling interests 1,769 1,752 1,831
__________ __________ __________
(2,223) 9,181 (8,952)
__________ __________ __________
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 2018
Six month period ended 31 March 2018
(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
2017 2,693 28,567 2,746 457 (4,240) 98,520 (13,255) (45,265) (2,553) 67,670 22,652 90,322
(Loss)/profit for
the period - - - - - (1,793) - - - (1,793) 1,769 (24)
Currency
translation
movement on net
investment
in subsidiary
undertakings - - - - - - - (3,059) - (3,059) - (3,059)
Movement in fair
value
of cash flow
hedges - - - - - - - - 1,447 1,447 - 1,447
Gain on effective
portion of cash
flow
hedges recognised
in
/ (released from)
reserves - - - - - - - - (446) (446) - (446)
Tax relating to
components
of comprehensive
income - - - - - - - - (141) (141) - (141)
Total comprehensive
income for the six
months to
31 March 2018 - - - - - (1,793) - (3,059) 860 (3,992) 1,769 (2,223)
Dividends 4 (4) - - - (5,962) - - - (5,962) (128) (6,090)
Exercise of share
options - - - - 1,396 (62) - - - 1,334 - 1,334
Share-based
payments - - - - - 167 - - - 167 - 167
Issue of shares - (20) - - - - - - - (20) - (20)
Tax debited to
equity - - - - - (40) - - - (40) - (40)
Balance as at 31
March
2018 2,697 28,543 2,746 457 (2,844) 90,830 (13,255) (48,324) (1,693) 59,157 24,293 83,450
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
31 March 2018
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
(Loss)/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 six
months to
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 2018
Year ended 30 September 2017 (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
2016 2,621 20,629 2,746 457 (4,370) 115,450 (21,317) (42,289) (2,992) 70,935 25,427 96,362
(Loss)/profit for
the period - - - - - (8,246) - - - (8,246) 1,831 (6,415)
Currency
translation
movement on net
investment
in subsidiary
undertakings - - - - - - - (2,976) - (2,976) - (2,976)
Movement in fair
value
of cash flow
hedges - - - - - - - - 1,336 1,336 - 1,336
Fair value of
cash
flow hedges
released
to the income
statement - - - - - - - - (675) (675) - (675)
Tax relating to
components
of comprehensive
income - - - - - - - - (222) (222) - (222)
Total comprehensive
income for the year
ended 30 September
2017 - - - - - (8,246) - (2,976) 439 (10,783) 1,831 (8,952)
Dividends 21 (21) - - - (8,678) - - - (8,678) (1,315) (9,993)
Exercise of share
options - - - - 130 (60) - - - 70 - 70
Share-based
payments - - - - - 201 - - - 201 - 201
Issue of shares 51 7,959 - - - - - - - 8,010 - 8,010
Tax debited to
equity - - - - - (12) - - - (12) - (12)
Put option
disposal - - - - - (60) 187 - - 127 (127) -
Acquisition of
subsidiary - - - - - - - - - - 4,636 4,636
Exercise put
option
on acquisition
of subsidiary - - - - - (75) 7,875 - - 7,800 (7,800) -
Balance as at 30
September
2017 2,693 28,567 2,746 457 (4,240) 98,520 (13,255) (45,265) (2,553) 67,670 22,652 90,322
Notes 1 to 18 form an integral part of the condensed consolidated financial statements.
Condensed Consolidated Statement of Financial Position
31 March 2018
31 March 31 March 30 September
2018 2017 2017
Unaudited Unaudited Audited
Notes GBP000 GBP000 GBP000
Non-current assets
Goodwill 7 88,087 112,624 92,566
Other intangible assets 8 54,213 71,046 61,867
Property, plant and equipment 3,366 2,857 2,783
Interests in associates and joint ventures 9 48,671 49,724 45,470
Venue advances and other loans 3,683 3,767 3,548
Derivative financial instruments 13 182 8 -
Deferred tax asset 4,828 4,320 5,411
___________ ___________ ___________
203,030 244,346 211,645
Current assets
Trade and other receivables 10 56,899 59,471 61,425
Tax prepayment 777 375 2,880
Derivative financial instruments 13 - 15 -
Cash and cash equivalents 26,234 15,795 23,321
Assets classified as held for sale 15 3,261 - -
___________ ___________ ___________
87,171 75,656 87,626
Total assets 290,201 320,002 299,271
Current liabilities
Trade and other payables 11 (16,443) (21,221) (21,332)
Current tax liabilities (1,056) - (3,834)
Deferred income (83,105) (80,115) (82,591)
Derivative financial instruments 13 (13,546) (21,875) (1,795)
Provisions (503) (269) (527)
Liabilities classified as held for sale 15 (1,881) - -
___________ ___________ ___________
(116,534) (123,480) (110,079)
Non-current liabilities
Bank loans 12 (77,385) (70,966) (72,998)
Provisions (117) (168) (273)
Deferred income (2,124) - -
Deferred tax liabilities (10,152) (13,848) (12,494)
Derivative financial instruments 13 (439) (3,201) (13,105)
___________ ___________ ___________
(90,217) (88,183) (98,870)
Total liabilities (206,751) (211,663) (208,949)
___________ ___________ ___________
Net assets 83,450 108,339 90,322
___________ ___________ ___________
Equity
Share capital 14 2,697 2,660 2,693
Share premium account 28,543 24,057 28,567
Merger reserve 2,746 2,746 2,746
Capital redemption reserve 457 457 457
ESOT reserve (2,844) (4,364) (4,240)
Retained earnings 90,830 111,743 98,520
Put option reserve (13,255) (21,317) (13,255)
Translation reserve (48,324) (37,013) (45,265)
Hedge reserve (1,693) (2,333) (2,553)
___________ ___________ ___________
Equity attributable to equity holders of the parent 59,157 76,636 67,670
Non-controlling interest 24,293 31,703 22,652
___________ ___________ ___________
Total equity 83,450 108,339 90,322
___________ ___________ ___________
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 2018
Six months Six months Year ended
to 31 March to 31 March 30 September
2018 2017 2017
Notes Unaudited Unaudited Audited
GBP000 GBP000 GBP000
---------------------------------------------------------------- ------ ------------- ------------- --------------
Operating activities
Operating profit/(loss) from continuing operations 3,051 5,553 (4,191)
Adjustments for non-cash items:
Depreciation and amortisation 6,901 8,953 16,326
Impairment of goodwill and intangible assets 3 - - 12,585
Impairment of investments in associates and joint ventures 3 - - 1,691
Derecognition of goodwill on cessation of trading 3 2,216 - -
Share-based payments 185 143 218
Share of profit from associates and joint ventures 9 (5,139) (3,864) (5,006)
(Decrease)/increase in provisions (183) (30) 371
Gain from disposal of plant, property and equipment (2) - -
Foreign exchange (gain)/loss on operating activities (555) 246 (337)
Loss on disposal of investments - - 3,712
Fair value of cash flow hedges recognised in the income
statement (446) (379) (661)
Dividends received from associates and joint ventures 9 1,693 620 3,831
Operating cash flows before movements in working capital 7,721 11,242 28,539
Decrease/(increase) in receivables 5,838 (7,778) (10,130)
Advances and prepayments to venues (3,865) (2,500) (5,187)
Utilisation of venue advances and prepayments 2,362 2,077 5,526
Increase in deferred income 4,327 18,197 20,673
(Decrease)/increase in payables (4,283) 599 2,864
Cash generated from operations 12,100 21,837 42,285
Tax paid (3,969) (2,608) (6,790)
Net cash from operating activities 8,131 19,229 35,495
Investing activities
Interest received 399 283 688
Investment in associates and joint ventures - - (220)
Acquisition of businesses - cash paid - (6,225) (9,673)
Cash acquired through acquisitions - 343 343
Purchase of property, plant and equipment and computer software (1,760) (1,512) (3,136)
Disposal of plant, property and equipment and computer software 68 10 238
Disposal of subsidiary - cash received - - 128
Cash disposed of through disposals - - (125)
Net cash flows from investing activities (1,293) (7,101) (11,757)
---------------------------------------------------------------- ------ ------------- ------------- --------------
Financing activities
Equity dividends paid (5,985) (5,368) (8,652)
Dividends paid to non-controlling interests (683) (112) (760)
Interest paid and bank charges (1,774) (1,913) (3,824)
Proceeds from the issue of share capital and exercise of share
options 1,314 - 4
Drawdown of borrowings 190,009 115,830 219,060
Repayment of borrowings (185,622) (119,400) (220,710)
Net cash flows from financing activities (2,741) (10,963) (14,882)
---------------------------------------------------------------- ------ ------------- ------------- --------------
Net increase in cash and cash equivalents 4,097 1,165 8,856
Net cash and cash equivalents at beginning of period 23,321 15,508 15,508
Effect of foreign exchange rates on cash and cash equivalents (270) (878) (1,043)
Cash and cash equivalents classified as held for sale (914) - -
---------------------------------------------------------------- ------ ------------- ------------- --------------
Net cash and cash equivalents at end of period 26,234 15,795 23,321
---------------------------------------------------------------- ------ ------------- ------------- --------------
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 2017 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 accounting policies applied by the Group in the interim financial statements are the same as those set out in the Group's Annual Report and Accounts for the year ended 30 September 2017.
Other than the amendments to IAS 7 Statement of cash flows, 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):
New, amended and revised Standards Effective date =============================================================== ============== Amendments to IFRS 2 Share-based payments 1 January 2018 Clarifications to IFRS 15 Revenue from contracts with customers 1 January 2018 IFRS 9 Financial instruments 1 January 2018 IFRS 15 Revenue from contracts with customers 1 January 2018 Amendments to IAS 12 Income taxes 1 January 2019 IFRS 16 Leases 1 January 2019
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, and IFRS 15 Revenue from contracts with customers.
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.
The adoption of IFRS 15 is not expected to have a material impact on the Group's Income Statement but may lead to a change in the Statement of Financial Position. The Group has significant forward bookings, which are currently recognised within trade debtors and deferred income at the point at which a contractual obligation to provide the service arises. Under IFRS 15, the deferred income, and corresponding debtor, may not be recognised until the earlier of the service being provided and the payment falling due. This may result in a material reduction to the deferred income and trade receivables on adoption of the standard. Management is currently in the process of assessing the extent of the impact on adoption of the new standard and the financial impact of the changes have yet to be quantified.
Notes to the Interim Financial Statements
2. Segmental information
The Group has identified reportable segments based on financial information used by the Senior Operating Board in allocating resources and making strategic decisions. The Senior Operating Board (consisting of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Strategy Director and HR Director), are considered to be the Group's Chief Operating Decision Maker. The Group evaluates performance on the basis of headline profit or loss before tax.
The Group's reportable segments are operational business units and groups of events that are managed separately, either based on geographic location or as portfolios of events. In the year ended 30 September 2017 the Group made changes to the reportable segments, adding a new Brands segment, which includes our Africa Oil Week, Breakbulk and Moda portfolios and is managed by the Brands Managing Director. This replaced the Rest of the World segment reported in the half-yearly financial report for the six months ended 31 March 2017, which also previously included central costs and other unallocated items that are now presented separately, as a reconciling item.
The products and services offered by each business unit are identical across the Group. The revenue and headline 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 operating segment as follows:
Six months to 31 March Eastern
2018 Central & Southern Total
Unaudited Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 16,641 11,262 7,487 4,638 35,334 75,362
Segment headline profit
before tax 10,594 3,514 1,158 (127) 11,048 26,187
Unallocated items (10,141)
Headline profit before
tax 16,046
Adjusting items (note 3) (14,762)
Profit before tax 1,284
Tax (1,308)
Loss after tax (24)
The revenue in the period of GBP75.4m includes GBP0.2m (six months to 31 March 2017: GBP0.2m; year ended 30 September 2017: GBP0.3m) of barter sales. No individual customer amounts to more than 10% of Group revenues.
Unallocated items include:
-- other income; -- head office costs; -- unallocated TAG costs of GBP2.3m;
-- foreign exchange gains and losses on translation of monetary assets and liabilities held in Group subsidiary companies that are denominated in currencies other than the functional currency of the subsidiaries; and
-- net finance costs.
Notes to the Interim Financial Statements
2. Segmental information (continued)
The Group's share of profits from associates and joint ventures, capital expenditure and amortisation and depreciation can be analysed by operating segment as follows:
Six months to 31 March Eastern
2018 Central & Southern Total
Unaudited Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of associates
and joint ventures
Share of results before
tax 6,665 - - - - 6,665
Tax (1,526) - - - - (1,526)
Share of results after
tax 5,139 - - - - 5,139
Capital expenditure
Segment capital expenditure 94 65 17 56 381 613
Unallocated capital expenditure 1,147
1,760
Depreciation and amortisation
Segment depreciation and
amortisation 1,982 2,534 204 1,315 145 6,180
Unallocated depreciation
and amortisation 721
6,901
The impairment and derecognition charges recognised in respect of goodwill, intangible assets and investments in associates and joint ventures can be analysed by operating segment as follows:
Six months Six months Year ended
to 31 March to 31 March 30 September
2018 2017 2017
GBP000 GBP000 GBP000
Asia - - 8,235
Brands 2,216 - 3,547
Eastern & Southern Europe - - 2,494
2,216 - 14,276
Notes to the Interim Financial Statements
2. Segmental information (continued)
The Group's assets and liabilities can be analysed by operating segment as follows:
Eastern
As at 31 March 2018 Central & Southern Total
Unaudited Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 116,602 51,485 15,110 27,010 69,020 279,227
Unallocated assets 10,974
Total assets 290,201
Liabilities
Segment liabilities (55,937) (6,957) (7,921) (10,649) (41,189) (122,653)
Unallocated liabilities (84,098)
Total liabilities (206,751)
Net assets 83,450
The comparative period segmental information has been restated to reflect the changes made to the operating segments in the prior year.
Six months to 31 March Eastern
2017 Central & Southern Total
Unaudited (restated) Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 13,186 10,020 8,622 6,837 30,923 69,588
Segment headline profit
before tax 7,413 3,031 1,553 1,264 10,981 24,242
Unallocated items (8,816)
Headline profit before
tax 15,426
Adjusting items (note 3) (12,296)
Profit before tax 3,130
Tax 116
Profit after tax 3,246
Notes to the Interim Financial Statements
2. Segmental information (continued)
Six months to 31 March Eastern
2017 Central & Southern Total
Unaudited (restated) Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of associates
and joint ventures
Share of results before
tax 5,002 - - - 2 5,004
Tax (1,140) - - - - (1,140)
Share of results after
tax 3,862 - - - 2 3,864
Capital expenditure
Segment capital expenditure 405 3 28 154 52 642
Unallocated capital expenditure 870
1,512
Depreciation and amortisation
Segment depreciation and
amortisation 2,288 2,569 301 2,380 792 8,330
Unallocated depreciation
and amortisation 623
8,953
The Group's assets and liabilities can be analysed by operating segment as follows:
Eastern
As at 31 March 2017 Central & Southern Total
Unaudited (restated) Asia Brands Asia Europe Russia Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 131,598 70,350 14,543 40,260 49,434 306,185
Unallocated assets 13,817
Total assets 320,002
Liabilities
Segment liabilities (38,033) (4,781) (6,540) (29,738) (40,962) (120,054)
Unallocated liabilities (91,609)
Total liabilities (211,663)
Net assets 108,339
Notes to the Interim Financial Statements
2. Segmental information (continued)
Eastern
Year ended 30 September Central & Southern Total
2017 Asia Brands Asia Europe Russia Group
Audited GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 23,777 18,704 21,736 17,041 71,365 152,623
Segment headline profit
before tax 6,885 5,374 6,541 4,766 26,339 49,905
Unallocated items (18,283)
Headline profit before
tax 31,622
Adjusting items (note 3) (34,785)
Loss before tax (3,163)
Tax (3,252)
Loss after tax (6,415)
Eastern
Year ended 30 September Central & Southern Total
2017 Asia Brands Asia Europe Russia Group
Audited GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Share of results of associates
and joint ventures
Share of results before
tax 5,095 - - - 1,415 6,510
Tax (1,173) - - - (331) (1,504)
Share of results after
tax 3,922 - - - 1,084 5,006
Capital expenditure
Segment capital expenditure 885 10 47 261 98 1,301
Unallocated capital expenditure 1,835
3,136
Depreciation and amortisation
Segment depreciation and
amortisation 4,567 5,166 566 3,815 959 15,073
Unallocated depreciation
and amortisation 1,253
16,326
Notes to the Interim Financial Statements
2. Segmental information (continued)
The Group's assets and liabilities can be analysed by operating segment as follows:
Eastern
Central & Southern Total
As at 30 September 2017 Asia Brands Asia Europe Russia Group
Audited GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets
Segment assets 116,002 56,156 13,063 27,373 68,813 281,407
Unallocated assets 17,864
Total assets 299,271
Liabilities
Segment liabilities (63,022) (9,369) (5,359) (9,079) (33,300) (120,129)
Unallocated liabilities (88,820)
Total liabilities (208,949)
Net assets 90,322
Geographical information
Information about the Group's revenue by origin of sale and non-current assets by geographical location are detailed below:
Revenue Non-current assets*
Six months Six months Year ended Six months Six months Year ended
to 31 to 31 30 September to 31 to 31 30 September
March March 2017 March March 2017
2018 2017 2018 2017
----------- ----------- -------------- ----------- ----------- --------------
Unaudited Unaudited Audited Unaudited Unaudited Audited
----------- ----------- -------------- ----------- ----------- --------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------- ----------- -------------- ----------- ----------- --------------
Asia 17,334 16,580 26,133 90,849 106,334 89,948
Central Asia 4,536 5,402 13,073 3,996 5,617 4,250
Eastern & Southern
Europe 3,961 5,981 15,032 20,275 25,930 22,617
Russia 26,384 23,085 52,340 26,921 34,913 28,783
Rest of the World 23,147 18,540 46,045 56,161 67,232 60,636
_______ _______ _______ _______ _______ _______
Total 75,362 69,588 152,623 198,202 240,026 206,234
________ ________ ________ ________ ________ ________
* Non-current assets exclude deferred tax assets and assets classified as held for sale.
Notes to the Interim Financial Statements
3. Adjusting items
The following (charges)/credits have been presented as adjusting items:
Six months to Six months to
31 March 2018 31 March 2017 Year ended 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Operating items
Amortisation of acquired intangible assets (5,764) (7,832) (14,069)
Impairment of goodwill - - (11,204)
Impairment of intangible assets - - (1,381)
Impairment of investments in associates and joint
ventures - - (1,691)
Derecognition of goodwill on cessation of trading (2,216) - -
Profit on disposal of investments - - (3,712)
Restructuring costs (4,090) (2,347) (4,982)
Transaction costs on completed and pending
acquisitions (774) (184) (406)
Tax on income from associates and joint ventures (1,526) (1,140) (1,504)
Financing items
Revaluation of liabilities on completed acquisitions (392) (793) 4,164
___________ ___________ ___________
(14,762) (12,296) (34,785)
Taxation
Tax related to adjusting items 1,451 2,442 3,559
Tax on income from associates and joint ventures 1,526 1,140 1,504
___________ ___________ ___________
(11,785) (8,714) (29,722)
___________ ___________ ___________
4. Tax on profit/(loss) on ordinary activities
Six months to Six months to
31 March 2018 31 March 2017 Year ended 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Current tax
UK corporation tax 200 37 (298)
Foreign tax 3,273 2,064 8,077
__________ __________ __________
3,473 2,101 7,779
Deferred tax (2,165) (2,217) (4,527)
__________ __________ __________
Tax on profit on ordinary activities 1,308 (116) 3,252
__________ __________ __________
Tax at the interim is charged on pre-tax profits, including those of associates and joint ventures, at a blended rate of 27% (2017: 24%) representing the best estimate of the weighted average annual corporation tax expected for the financial year adjusted for discrete items in the interim period.
Notes to the Interim Financial Statements
5. Dividends
Six months to Six months to Year ended
31 March 2018 31 March 2017 30 September 2017
Unaudited Unaudited Audited
Per Settled in Settled in Per Settled in Settled Per Settled in Settled in
share cash scrip share cash in scrip share 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
2017 2.5 5,962 701 - - - - - -
Interim
dividend in
respect of
the year
ended 30
September
2017 - - - - - - 1.5 3,328 686
Final dividend
in respect of
the year
ended 30
September
2016 - - - 3.0 5,350 2,497 3.0 5,350 2,497
2.5 5,962 701 3.0 5,350 2,497 4.5 8,678 3,183
The Directors have proposed an interim dividend for the year ending 30 September 2018 of 1.5p per ordinary share, a distribution of approximately GBP4.0m. The proposed dividend has been approved by the Board and has not been included as a liability as at 31 March 2018.
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 Year ended 30 September 2017
31 March 2018 Unaudited Unaudited Audited
Number of shares ('000) Number of shares ('000) Number of shares ('000)
Weighted average number of
shares:
For basic earnings per share 266,817 261,081 263,241
Dilutive effect of exercise of
share options 681 168 309
________ ________ ________
For diluted earnings per share 267,498 261,249 263,550
Basic and diluted earnings per share
The calculations of basic and diluted earnings per share are based on the loss for the financial year attributable to equity holders of the parent of GBP1.8m (31 March 2017: profit of GBP1.5m; 30 September 2017: loss of GBP8.2m). Basic and diluted earnings per share were (0.7)p and (0.7)p respectively (31 March 2017: 0.6p and 0.6p respectively; 30 September 2017: (3.1)p and (3.1)p respectively). 681,000 share options (31 March 2017: 168,000) were excluded from the weighted average number of ordinary shares used in the calculation of the diluted earnings per share because their effect would have been antidilutive.
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 GBP10.0m (31 March 2017: GBP10.2m; 30 September 2017: GBP21.5m). Headline basic and diluted earnings per share were 3.7p and 3.7p respectively (31 March 2017: 3.9p and 3.9p respectively; 30 September 2017: 8.2p and 8.1p respectively).
Notes to the Interim Financial Statements
7. Goodwill
Total
Unaudited
GBP000
At 1 October 2017 92,566
Derecognition of goodwill on cessation of trading (2,216)
Exchange differences (2,263)
_________
At 31 March 2018 88,087
_________
A derecognition charge of GBP2.2m has been recognised in the Consolidated Income Statement in respect of the derecognition of goodwill in RAS Publishing, within the Brands segment. This arose due to the cessation of trading at RAS Publishing during the year, resulting in the derecognition in full of the carrying value of the goodwill held.
In line with the disclosures made in the 2017 Annual Report and Accounts, where impairments were recognised in respect of a number of CGUs, reducing headroom in these CGUs to nil, we acknowledge a reasonably possible change in the future cash flows or discount rates for these CGUs could result in an impairment in the future.
8. Other intangible assets
Total
Unaudited
GBP000
At 1 October 2017 61,867
Additions 355
Amortisation of acquired intangible assets (5,762)
Amortisation of computer software (548)
Exchange differences (764)
Assets classified as held for sale* (935)
_________
At 31 March 2018 54,213
_________
*All assets and liabilities of TradeLink ITE Sdn. Bhd. have been classified as held for sale in accordance with IFRS 5 prior to the subsequent disposal of the entity after the balance sheet date. See Note 15 for further detail.
9. Interests in associates and joint ventures
Total
Unaudited
GBP000
At 1 October 2017 45,470
Share of results of associates and joint ventures 5,139
Dividends received (1,693)
Foreign exchange (245)
_________
At 31 March 2018 48,671
_________
Notes to the Interim Financial Statements
10. Trade and other receivables
31 March 31 March
2018 2017 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade receivables 38,448 37,171 44,133
Other receivables 4,656 3,708 3,917
Venue advances and prepayments 4,148 3,923 2,580
Prepayments and accrued income 9,647 14,669 10,795
___________ ___________ ___________
56,899 59,471 61,425
___________ ___________ ___________
11. Trade and other payables
31 March 31 March
2018 2017 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade payables 755 2,210 2,595
Taxation and social security 1,723 1,925 2,357
Other payables 3,378 4,021 5,715
Accruals 9,670 9,365 9,712
Deferred consideration 917 1,777 953
Contingent consideration - 1,923 -
___________ ___________ ___________
16,443 21,221 21,332
___________ ___________ ___________
12. Bank loans and overdraft
A refinancing of the Group's external debt facility was completed on 22 November 2017 and gives the Group access to a new GBP100m facility from a syndicate of four banks, HSBC, Barclays, Citibank and Commerzbank. The facility amortises by GBP10.0m each year and expires in November 2021.
Total drawdowns under the facility of GBP77.4m at 31 March 2018 were denominated in sterling (GBP75.5m) and US dollars (GBP1.9m). At 31 March 2018 the Group had GBP22.6m (31 March 2017: GBP22.0m) 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 GBP50.0m of the debt (31 March 2017: GBP40.0m; 30 September 2017: GBP40.0m), reducing the exposure to fluctuations in interest rates. All borrowings are secured by a guarantee between a number of Group companies.
Notes to the Interim Financial Statements
13. 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 and interest rate swaps are classified as Level 2, while the equity and put options are classified as Level 3.
31 March 2018 31 March 2017 30 September 2017
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 - -
_________ _________ _________ _________ _________ ________
- - 3,276 15 - -
Non-current assets
Foreign currency forward contracts - - 3,621 8 - -
Interest rate swaps 182 182 - - - -
_________ _________ _________ _________ _________ ________
182 182 3,621 8 - -
Current liabilities
Foreign currency forward contracts 14,176 1,021 15,346 1,356 15,346 1,795
Equity options 15,745 12,525 23,067 20,519 2,278 -
_________ _________ _________ _________ _________ ________
29,921 13,546 38,413 21,875 17,624 1,795
Non-current liabilities
Foreign currency forward contracts 1,969 39 12,285 802 8,061 490
Equity options 1,298 400 3,118 2,208 15,104 12,575
Interest rate swaps - - 191 191 40 40
_________ _________ _________ _________ _________ ________
3,267 439 15,594 3,201 23,205 13,105
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 equity options, these are valued based on a multiple as contractually agreed of forecast future EBITDA for each relevant option. The key unobservable inputs relate to the EBITDA multiple (ranging from 7.5x to 12.5x) and forecast future EBITDA for each entity. 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
Unaudited
GBP000
At 1 October 2017 12,575
Unwind of discount 929
Revaluation (504)
Exchange differences recognised in other comprehensive income (75)
_________
At 31 March 2018 12,925
_________
Notes to the Interim Financial Statements
13. Derivative financial instruments (continued)
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 2018 cover exchange exposures over the next 15 months. These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity and reclassified subsequently to the income statement.
14. Share capital
31 March 2018 31 March 2017 30 September 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Authorised
375,000,000 ordinary shares of 1 penny each (31 March 2017:
375,000,000; 30 September 2017:
375,000,000) 3,750 3,750 3,750
__________ __________ __________
Allotted and fully-paid
269,679,563 ordinary shares of 1 penny each (31 March 2017:
266,044,865; 30 September 2017:
269,280,274) 2,697 2,660 2,693
__________ __________ __________
The Company announced a scrip dividend alternative for the year ended 30 September 2017 final dividend, allowing shareholders to elect to receive their dividend in the form of new ordinary shares. As a result of this, 399,289 new ordinary shares of 1p each were issued. During the period, no ordinary shares of 1p each (2017: 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.
Notes to the Interim Financial Statements
15. Assets and liabilities classified as held for sale
On 24 April 2018, the Group announced the disposal of TradeLink ITE Sdn. Bhd. In relation to this, the assets and liabilities of TradeLink ITE Sdn. Bhd. have been classified as held for sale at 31 March 2018.
In order to be recognised as a disposal group held for sale, IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' requires the business to be available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, and the sale must be highly probable.
The Group has considered how advanced the disposal was at 31 March 2018, and concluded that the relevant criteria for recognition as held for sale have been met as at this date, which is further supported by the subsequent disposal on 24 April, discussed further in Note 17.
31 March 2018
Unaudited
GBP000
Other intangible assets 935
Property, plant and equipment 126
Deferred tax asset 120
Trade and other receivables 1,166
Cash and cash equivalents 914
___________
Total assets classified as held for sale 3,261
Trade and other payables (22)
Corporation tax (170)
Deferred income (1,689)
___________
Total liabilities classified as held for sale (1,881)
___________
Net assets classified as held for sale 1,380
___________
16. Net debt
Cash and cash equivalents classified as
At 1 October 2017 Cash flow Foreign exchange held for sale At 31 March 2018
GBP000 GBP000 GBP000 GBP000 GBP000
Cash 23,321 4,097 (270) (914) 26,234
Bank loans (72,998) (4,387) - - (77,385)
Net debt (49,677) (290) (270) (914) (51,151)
Net debt is defined as cash and cash equivalents after deducting bank loans. The Board consider net debt to be a reliable measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that can be used to assess the combined impact of the Group's cash position and its indebtedness.
Notes to the Interim Financial Statements
17. Events after the balance sheet date
Subsequent to the assets and liabilities of TradeLink ITE Sdn. Bhd., the owner of Metaltech, the metalworking exhibition in Malaysia, being classified as held for sale as at 31 March 2018, the Group announced on 24 April 2018 that it had disposed of TradeLink ITE Sdn. Bhd. to UBMMG Holdings Sdn. Bhd., a subsidiary of UBM plc for total cash consideration of MYR 23 million (GBP4.2m) subject to working capital adjustment at completion. The total consideration will be payable upon completion and the proceeds will be reinvested into the Group.
18. 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 2018. Transactions between the Group and its associates, where relevant, are disclosed below.
Trading transactions with associates
During the period ended 31 March 2018 the Group charged management fees of GBP0.3m (2017: GBP0.2m) to Sinostar ITE, the Group's joint venture operation in Hong Kong and China.
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 2018 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, 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 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 2018 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
Statutory Auditor
London
15 May 2018
Directors and professional advisers
Directors Richard Last, non-executive Chairman (appointed 12 February 2018)
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
Neil England, non-executive Director
Linda Jensen, non-executive Director (resigned 30 April 2018)
Stephen Puckett, non-executive Director
Sharon Baylay, non-executive Director
Company Secretary Waterstone Company Secretaries Ltd
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
Commerzbank AG, 30 Gresham St, London, ECV2 7PG
Citibank, 33 Canada Square, Canary Wharf, London, E14 5BL
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
Interim dividend 2018:
Ex-dividend date 7 June 2018 Record date 8 June 2018 Payment date 2 August 2018
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 GGUPGAUPRPWC
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May 15, 2018 02:02 ET (06:02 GMT)
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