Q1 Interim Management Statement
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ITE Group plc is today publishing its Interim Management Statement for the period from 1 October 2015 to the date of this announcement, incorporating the Group's first quarter trading period from 1 October 2015 to 31 December 2015. This coincides with the Group's Annual General Meeting which is being held at 12 noon today. Other than the information contained in this Interim Management Statement there have been no material events or transactions in the period from 31 December 2015 to 28 January 2016.
First Quarter Trading Update
The Group's trading for the first three months of the financial year was in line with management expectations.
Revenue for the three month period to 31 December 2015 was £34.8m (three months to 31 December 2014: £25.4m). On a like-for-like basis revenues for the quarter are, as expected, 13% behind the comparative period.
This year's first quarter result includes the acquisitions of Breakbulk, Africa Oil Week and the effect of ABEC becoming a subsidiary. These acquisitions, combined with the biennial pattern, have offset the challenging trading environment in Russia and Central Asia where the economic downturn had not affected the comparative period last year.
Chinacoat was held in Shanghai in November 2015 and reported both record attendance and record volume having sold 40,000sqm, up 16% on the equivalent event held in November 2013. Chinacoat is now ITE's second largest exhibition by size although, as a joint venture, it is not included in consolidated revenue.
On 28 October 2015, the Group exercised its option to acquire a further 31.7% of Mumbai-based ABEC for circa £14m, taking the Group's holding in ABEC to 60%. ABEC is one of India's leading exhibition businesses, running over 20 exhibitions across different industry sectors including building & interiors, education, fashion, real estate, and oil & gas. Their largest event, Acetech Mumbai, is now in ITE's top 10 events by size and ran in October 2015 with 27,800sqm, up 2% in the wall-bound venue.
On 11 January 2016, the Group acquired 70% of Shanghai ITE Ebseek Exhibitions Co Ltd ("ITE Ebseek"), the organiser of industrial fasteners exhibitions in Shanghai and Guangzhou, for consideration of £3.3m, of which £0.9m is deferred and contingent on the performance of the 2016 and 2017 events. The annual exhibition in Shanghai covering 15,000sqm has been running for six editions at Shanghai World Expo Exhibition & Convention Center. The smaller Guangzhou event was launched in 2013 and has just held its third edition.
As previously stated, Neil Jones announced his resignation as Chief Financial Officer on 16 October 2015 and will leave the Group on 31 January 2016. A search process is underway and Des McEwan, ITE's Group Financial Controller is now acting as Interim Group Finance Director. Des joined ITE four years ago following a successful 10 year career at a global professional services firm.
The Group's balance sheet and operational cash flows remain strong. Following the exercise of the ABEC option and the recent acquisition of a 70% stake in ITE Ebseek, the Group's net debt stood at £66m on 22 January 2016.
The Group's results remain sensitive to the economic climate in the oil producing economies of Russia, Kazakhstan and Azerbaijan. If the recent fall of the oil price is sustained, the economic situation in these countries is likely to deteriorate further. The Group's like-for-like trading volumes are currently 10% less than this time last year, and like-for-like revenues are also 10% behind. The Group's reported revenues reflect the exchange rates prevalent at the time the events take place, and therefore will be sensitive to the Ruble/Sterling exchange rate over the key trading months of March and April. At current exchange rates, the Group has contracted £86m of revenue for FY 2016.
The Board continues to monitor the effects of the prevailing economic conditions and is confident that the Group's strong business operations are well positioned to benefit from any future improvement in their economic environment. The Group will continue to drive underlying growth outside of the oil producing economies, building on the strategic action it has taken in recent years to successfully diversify the Group.
ITE will announce Interim Results for the six month ended 31 March 2016 on Monday 9 May 2016.