Interim results announcement

 ITE Group Logo


Good performance in a challenging trading environment

  Six months to 
31 March 2015
Six months to 
31 March 2014
Volume sales 276,500 m2 320,100 m2
Revenue £56.1m £71.2m
Gross margin 40.6% 40.2%
Pre-tax profit £7.8m £12.2m
Headline pre-tax profit* £17.5m £18.2m
Diluted earnings per share 3.0p 4.3p
Headline diluted earnings per share** 6.0p 6.0p
Interim dividend per share 2.5p 2.5p
Net debt £56.1m £1.8m


  • Results are in line with management expectations
  • Acquisitions drive the geographical diversification of the Group
  • Strong operating performance from Asia
  • Trading environment in Russia has now stabilised
  • Interim dividend maintained
  • Confidence in full year outcome with 91% of revenues for 2015 now contracted

Russell Taylor, CEO of ITE Group plc, commented:
“ITE has delivered a good first half performance despite a challenging trading environment in the Group’s largest market. The recent acquisitions of Eurasia Rail in Turkey, Africa Oil Week in South Africa and Breakbulk’s series of events have helped to diversify the Group’s presence outside Russia, and our businesses in Asia and Turkey continue to perform well.

“Looking forward, the trading environment in Russia has now stabilised and our recent acquisitions are performing in line with expectations.  ITE remains in a strong financial position and we continue to seek opportunities to expand the business that are consistent with our strategy of building market leading positions in higher growth markets. The Group enters the second half with good visibility on current year bookings and the Board has confidence in the full year outcome.”

*  Headline pre-tax profit is defined as profit before tax, excluding amortisation of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options, imputed interest charges on put option liabilities, direct costs on completed and pending acquisitions & disposals and tax on income from associates – see note 5 to the consolidated financial statements for details.

**  Headline diluted earnings per share is calculated using profit attributable to shareholders before amortisation of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options, imputed interest charges on put option liabilities and direct costs on completed and pending acquisitions & disposals – see note 8 to the consolidated financial statements for details.
Where used, like-for-like measures are stated on a constant currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences and biennial events.


Russell Taylor, Chief Executive, ITE Group plc   020 7596 5000
Neil Jones, Group Finance Director, ITE Group plc    
Charles Palmer/Emma Appleton, FTI Consulting   020 3727 1021
James Serjeant, Numis   020 7260 1309

Executive summary
ITE has delivered a good performance over the first six months, which reflects both the resilience of the Group’s business and the difficult trading conditions and currency volatility it has experienced in Russia. As anticipated, revenues of £56 million are 20% less than for the same period last year, and headline profits before tax of £17.5 million are slightly less than reported at this time last year. Fully diluted headline earnings per share were 6.0 pence (2014: 6.0 pence).

Over the last six months, the Group has made significant progress in developing its business outside Russia and strengthening its portfolio of market leading events in its industry sectors. The transport and logistics portfolio has been enhanced by the additions of Eurasia Rail and the Breakbulk portfolio. Eurasia Rail is the leading railway infrastructure show in Turkey and was acquired in December 2014 for an initial £7.3 million. Also in December, the Group acquired the Breakbulk series of events for £27 million. Breakbulk is a global series of leading exhibitions, serving the transport and logistics market for moving large scale project equipment. Its events are held annually in Houston, Antwerp, Shanghai, Johannesburg, Istanbul and Sao Paulo. Finally, in March the Group acquired a 50.1% stake in Africa Oil Week (“AOW”) for £16.0m, part financed by a £12.0 million placing of shares. AOW, an annual Oil and Gas Confex held in the Cape Town International Convention Centre, is the longest-running and most prominent event held in Africa for the continent’s fast-growing oil, gas and energy industry. As well as strengthening ITE’s portfolio of oil and gas events, this establishes a first-time presence for ITE in Africa, and provides the Group with a base from which to grow its portfolio of events across the continent. These acquisitions have been successfully integrated and operating performances are in line with our initial expectations.

The trading environment in Russia has now stabilised with like-for-like volume sales down by circa 20% from their prior year comparatives. Management has taken appropriate steps to maintain the gross profit margin on events by reducing costs proportionately. The Group’s businesses in Asia (conducted mostly through associate owned businesses) and in Turkey have performed ahead of expectations and the rest of the Group is performing broadly in line with expectations. Through its ongoing strategy of building its business both organically and through acquisition, the Group has successfully diversified its revenue and profit streams, broadening its geographical exposure and reducing its historic reliance on a single market. The Group will continue to expand its business in accordance with its strategy of building market leading positions in higher growth markets.

Financial performance
Revenues for the first six months of the year were £56.1 million (2014: £71.2 million), in line with expectations. The change in revenue reflects the effect of weaker exchange rates which reduced reported revenues by £10.4 million, a weaker biennial pattern of £6.0 million, and a slowdown in trading in Russia and Ukraine.  These factors were partially offset by the effect of acquisitions (£3.6 million) and organic growth in other markets.

Headline profit before tax for the first six months of the year was £17.5 million (2014: £18.2 million) reflecting the weaker biennial pattern (£1.8 million), lower currency translation rates (£2.2 million), and the difficult trading conditions in Russia and Ukraine (£2.5 million). Profits were helped by a foreign exchange gain on balance sheet assets of £4.1 million (2014: £1.6 million), strong growth of £1.6 million from ITE’s share of its associate businesses in Asia, and a first time contribution of £1.8 million from the newly acquired events of Breakbulk China and Eurasia Rail in Turkey.

Reported profits before tax were £7.8 million (2014: £12.2 million). Headline diluted earnings per share for the first six months were 6.0p (2014: 6.0p) and fully diluted earnings per share for the first six months were 3.0p (2014: 4.3p). The Group’s cash flow generated from operations over the first six months was £18.0 million (2014: £30.6 million), and during the period £54.4 million has been applied to fund acquisitions and £12.2 million to dividends, resulting in the Group’s net debt standing at £56.1 million at 31 March 2015 (2014: £1.8 million). The Group retains a strong balance sheet and its banking facilities of £100 million have been secured through to 31 March 2019.

The Board has maintained an interim dividend of 2.5p per share (2014: 2.5p per share). 

Trading highlights and review of operations
Over the first half of the financial year, the Group experienced mixed trading conditions with strong growth in Asia and difficult trading conditions in Russia and Ukraine. During the period the Group organised 127 events (2014: 136 events) which generated like-for-like revenues 7% lower than for the same period last year.

Actual volume sales for the period were 276,500 sqm (2014: 320,100 sqm), reflecting the weaker biennial pattern and underlying trading conditions in Russia and Ukraine.   Volume sales were 15% lower on a like-for-like basis in comparison to the same period last year.

A summary of the Group’s fully consolidated sales and profits for the first six months of the year is set out below.

  Square meters sold
Gross Profit
First half 2014 320 71.2 28.6
Non-annual 2014 (31) (6.2) (1.9)
Annually recurring 2014 289 65.0 26.7
Acquisitions 15 3.6 1.8
Timing differences 14 2.6 1.2
Non-recurring events (15) (2.2) (0.9)
FX Translation - (10.4) (3.9)
Organic change (28) (2.7) (2.2)
Annually recurring 2015 275 55.9 22.7
Non-annual 2015 1 0.2 0.1
First half 2015 276 56.1 22.8

As expected, volume sales in Russia over the first six months of the year were 16% lower reflecting the effects of the economic slowdown and the absence of the biennial events Polygraphinter (printing) and Woodex.

Moscow was the most resilient office over the first half of the financial year, with like-for-like volume sales down by 11%. Aquatherm and the Pharma events benefitted from early bookings in more benign conditions and performed the best of the first half events. Moscow’s largest event in the first half is the Moscow International Travel & Tourism event, which suffered a 20% decline in volume sales to 16,300sqm (2014: 20,300sqm) as result of the slowdown in outbound Russian tourism. Novosibirsk and Krasnodar were the hardest impacted of the Group’s Russian offices with like-for-like volume falls of 30% and 17% respectively, with both heavily impacted by declines in their construction events.

Central Asia & the Caucasus
Like-for-like volume sales for the first six months in Central Asia and the Caucasus were 2% higher than for the comparative period, led by good growth across most sectors in Uzbekistan.

The largest part of the Group’s business in the region is Kazakhstan, which reported a 1% decrease in like-for-like volumes sales. The largest event in the region is the Kazakhstan International Oil & Gas Exhibition (KIOGE), which was 14% smaller this year at 6,800sqm (2014: 8,000sqm), reflecting a slowing level of new development activities in the country.

Eastern & Southern Europe
Trading in Ukraine continues to be severely impacted by the on-going geopolitical issues. The business, which now represents less than 2% of Group profits for this financial year (3% in 2014), has continued to operate the majority of its events, albeit with fewer exhibitors, but visitors numbers have held up well. Overall volumes sales for the first half of the year were 12,600sqm a 42% decrease on the comparative pre-crisis period. Despite these significant falls in volumes the business remains profitable and has recently been active in launching new events in Kiev.

In Turkey, the Group has focused on consolidating its operations under one roof and integrating Eurasia Rail, which held its first event under ITE ownership, selling circa 10,000sqm and performing in line with initial expectations. The leading events taking place in the first half are the travel event EMITT and Eurasia Rail, both of which performed ahead of their prior editions. Turkeybuild, the pre-eminent construction event in Turkey, took place in late April and delivered its largest ever event at 40,000sqm (2014: 36,600sqm), taking advantage of recently completed additional venue space.


In Asia, the Group’s activities are largely conducted through joint venture arrangements, ABEC in India and Sinostar in China, both of which are accounted for as joint ventures and associates in the financial statements. In India ABEC’s construction events, which collectively sold over 65,000sqm, performed strongly, showing good revenue and profit growth. Sinostar’s Chinacoat exhibition was held in Guangzhou this year and sold over 34,000sqm, 11% ahead of its equivalent event held in November 2012, resulting in strong revenue and profit growth.

Overall volume sales from the Group’s UK fashion portfolio were similar to last year. In London, good growth at the premier menswear and childrenswear events were offset by temporary unavailability of venue capacity this year for the womenswear event Scoop. In Birmingham, MODA, the largest event in the portfolio, was slightly ahead of the prior year selling 16,700 sqm (2014: 16,500).

April trading
April remains the largest trading month for the Group. After the currency volatility of the first half of the year, April saw more stability in the Ruble exchange rate. Mosbuild, which in common with other construction businesses in Russia was impacted by the economic conditions as well as local competition, reported volumes 40% less than last year’s comparable event.  Other leading events in Russia also reported lower volumes with the Moscow International Protection & Security event proving more resilient than the transport and logistics event TransRussia. In contrast, the Group saw good growth at Turkeybuild following the opening of new space at the venue.

Set out below are the results for the Group’s principal events taking place in April 2015:

  2015 sqm. 2014 sqm.
MosBuild 39,100 65,300
TurkeyBuild 40,000 36,300
Moscow International Protection & Security 10,900 11,700
TransRussia 7,800 10,000

As at 7 May 2015, the Group had booked revenues for the current financial year of £122 million (2014: £159 million). On a like-for-like basis this represents a decrease of 12% against the comparable figure for last year. The decline in bookings includes a 23% like for like reduction in Russian bookings which have stabilised over recent months.

The Group enters the second half of the year in a good financial position with long-term secured bank facilities to fund future corporate development. ITE continues to generate good cash flows and will continue with its successful strategy of developing market leading positions in higher growth markets and of further diversifying its portfolio outside of Russia. The Group operates a resilient business model, with a flexible cost base and is well positioned to weather the adverse economic conditions in Russia. With good visibility on current year bookings the Board remains confident in the full year outcome and in the Group’s future prospects.

Going Concern
As stated in note 20 to the condensed financial statements, the directors are satisfied that the Group has sufficient resources to continue to operate for the foreseeable future, a period of not less than 12 months from the date of this report.  Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.  

> Download full statement in PDF format (507Kb)
> Download investors presentation in PDF format (434Kb)

< Go Back