Proposed disposal of ITE Expo LLC
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ITE Group plc today announces the proposed disposal of ITE Expo LLC ("ITE Expo"), the operating company for 56 of the Group's Non-Core, regionally-focused, smaller events in Russia, to Shtab-Expo LLC (the "Purchaser) (the "Transaction"). These events comprise a significant proportion of the Group's Non-Core assets in Russia. This disposal is a major step in delivering a key pillar of the Group's Transformation and Growth (TAG) programme to focus on must-attend International events by actively managing its portfolio.
ITE retains 16 designated Core events in Russia, which have international exhibitors and visitors, and these form part of a new legal entity, ITE Expo International LLC. These Core Events include market-leading brands like MosBuild, WorldFood Moscow, YugAgro and MITT. The proposed disposal will enable management to focus on those Core Events which have a greater potential to deliver sustainable growth and value for Shareholders.
The 56 regional Non-Core Events in Russia, which are being disposed of, include VacuumTech Expo, Stomatology St Petersburg, UMIDS Krasnodar and Jewellery Salon Krasnodar. In the financial year ended 30 September 2017, these Non-Core Events in Russia generated revenues of approximately £12.0 million and contributed operating profits of approximately £1.3 million. These Non-Core Events in Russia comprised gross assets of approximately £14.3 million as at 30 September 2017.
The Group will receive consideration of RUB 640 million (approximately £8 million) over the nine years following completion of the Transaction together with additional variable consideration of up to RUB 400 million (approximately £5 million) based on the Target's incremental revenue growth during this period. The terms of the Transaction incentivises the Purchaser to make earlier payments to satisfy the consideration. If the Purchaser has by 30 September 2023 paid consideration of RUB 520 million (approximately £6.5 million), exclusive of variable consideration based on incremental revenue growth, this will satisfy in full the Purchaser's obligation to pay the consideration, including any future variable consideration.
The Directors intend to use the proceeds from this disposal for general corporate and working capital purposes. Whilst the disposal is expected to be marginally dilutive to earnings, management expect the overall benefits of the TAG programme, and in particular the focus on our core events in Russia, to exceed this short-term dilution.
Mark Shashoua, CEO, ITE Group plc said:
"The proposed sale is a milestone in delivering a key pillar of our Transformation and Growth Programme - to actively manage our portfolio. These regional events had previously been separated into a different business unit from the international Core business and so this disposal will simplify operations significantly. By selling this portfolio of smaller, lower-growth regional Russian events we will be able to focus our time and investment on our internationally-focused Core shows which have a much greater potential to deliver sustainable growth."
The Purchaser is 99% owned by Mr Alexander Shtalenkov, General Director of ITE Expo, with the remaining 1% of participatory interests being held by his spouse. The Transaction is a related party transaction for the purposes of the Listing Rules because Mr Shtalenkov is the General Director of ITE Expo and is therefore a related party of the Group. The Transaction, as a consequence is conditional on shareholder approval.
Further details of the Transaction and a notice convening a general meeting to approve the Transaction will be sent to ITE shareholders in due course.
For further information please contact:
+44 (0) 20 7596 5000
Melissa McVeigh, Director of Communications
Numis Securities Limited
+44 (0) 20 7260 1000
Nick Westlake / Toby Adcock / Hugo Rubinstein
+44 (0) 20 3727 1000
Charles Palmer / Harry Staight
'Core Events' are defined as events that the Group believe are of strategic importance to the Group's future, including the Group's largest international events and those with the greatest potential for growth.
'Non-Core Events' are defined as events which the Group believe have less potential for growth.
ITE Expo International LLC consists of 16 Core international Events as well as 22 Non-Core regional events based in Siberia.
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 plc is a public limited company and has been listed on the main market of the London Stock Exchange since 1998.
This announcement contains forward-looking statements relating to the business, financial performance and results of ITE and the industry in which ITE operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither ITE nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.
Numis Securities Limited ("Numis") which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting solely for ITE in relation to the Transaction and nobody else as a client in relation to the Transaction and will not be responsible to anyone other than ITE for providing the protections afforded to the clients of Numis or for providing advice in relation to the Transaction.