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RNS
ITE Group PLC  -  ITE   

Interim Results

Released 07:02 15-May-2018

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 £300m

 

 

Financial highlights


Six months to

31 March 2018

Six months to

31 March 2017




Volume sales

353,300 m2

325,200 m2

Revenue

£75.4m

£69.6m

Headline profit before tax1

£16.0m

£15.4m

Profit before tax

£1.3m

£3.1m

Headline diluted earnings per share2

3.7p

3.9p

Diluted earnings per share

(0.7p)

0.6p

Interim dividend per share

1.5p

1.5p

Net debt3

£51.2m

£55.2m

 

·        First year of like-for-like4 growth in volume and yields since 2014 

·        Revenue of £75.4m; 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 £16.0m; statutory profit before tax of £1.3m

·        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 £51.2m

·        Maintained interim dividend of 1.5p, in line with policy

·        Forward bookings5 of £144 million already contracted for FY18; 2019 forward bookings up 31% on a like-for-like basis

Strategy update

·        Early TAG initiatives and focus on Core6 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 £4.2m

 

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 £31.0m. 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 £75.4m (2017: £69.6m) 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 (£6.2m), 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 (£4.3m) and a small positive impact from the acquisition of the Gehua portfolio of events in China, which completed during the previous year (£0.5m, net of other event disposals). This was offset by the adverse impact from foreign exchange (£3.5m) and the cancellation of 22 of our less profitable events in line with our strategy (£1.6m, net of launches).

Despite the revenue impact of the net cancellations and costs associated with the TAG programme, headline profits before tax of £16.0m are 4% higher than the same period last year. The increase is due to the positive impact of biennial events and timing differences (£2.4m), net acquisitions (£0.4m) and foreign exchange (£0.2m). This was offset by the impact of ongoing investment in the TAG programme (£2.7m). 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 £1.5m 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 £1.3m (2017: £3.1m). This is after including £2.3m of one-off costs relating to the TAG Programme (2017: £nil). This takes our total spend, recognised in the income statement, on one-off TAG costs to £6.9m 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 £0.4m (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 £6.7m 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 £31m (2017: £27m).

As at 11 May 2018, the Group has contracted £144m 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 Lever

Benefit

2018 Milestones

Create best practice functions and teams

·   Deliver best-in-class processes implemented globally across the Group, greater efficiency via standardised processes, a more structured and accountable leadership, and a globally consistent 'ITE way' driving efficiency and greater attendee experience

 

·   Completed the design of the 'ITE way'

·   Implementation has begun of the 'ITE way'

Invest in show operations

·   Enhance customer retention and exhibitor reach, obtain enriched data insights and improve operational efficiency

·   Regional customer success teams have been started

·   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 capabilities, and establish the right capabilities to drive business and adapt to market changes

·   Dedicated specific training programmes have been rolled out for Sales teams

·   All key Regional Directors have been recruited

Drive a performance culture

·   Create a values-driven organisation that encourages high performance and rewards success and talent, building a winning team with an aspirational culture

 

·   Standardisation of performance management is ongoing

Build and maintain fit for purpose IT infrastructure and systems

·   Create a global IT function and infrastructure that can support the requirements of a flexible, mobile and highly effective workforce that operates globally, but delivers locally, and supports and enables the 'ITE way' of working

 

·   Integrated sales and marketing systems have been launched

·   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 (£4.2m). 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 £144m 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 £31m 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 £1.5m 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 £75.4m (2017: £69.6m). Revenue is up £5.8m, 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 £3.5m on the translation of revenue into sterling when compared to the prior period, but has had a £0.2m positive impact on profits. This is due to a natural hedging of costs in the same currencies which reduces the £3.5m revenue impact to £0.6m 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 £0.6m compared to a loss of £0.2m 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 £1.3m (2017: £3.1m). This is after including non-underlying restructuring costs of £4.1m (2017: £2.4m) incurred primarily as part of the TAG programme (£2.3m, 2017: £nil), with the remaining £1.8m (2017: £2.4m) 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 (£0.6m). One-off costs of £2.2m (2017: £nil) 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 £16.0m (2017: £15.4m). 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 £2.4m as a result of biennial and event timing differences and by £0.4m due to the first time impact of net acquisitions all contributing to an increase, offset by planned TAG costs of £2.7m 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 to 31 March 2018

Six months to 31 March 2017

Year ended

30 September 2017


£m

£m

£m





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 £2.3m specifically related to the TAG programme. The remaining £1.8m 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 £0.5m), 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 £0.9m).

 

Cash flows

 

The Group's cash flow generated from operations over the first six months was £12.1m (2017: £21.8m) which after adjusting for the non-cash foreign exchange gain of £0.6m (2017: loss of £0.2m) and net venue utilisation of £1.5m (2017: net utilisation of £0.4m) represents operating cash conversion1 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 £51.2m (2017: £55.2m). 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 £100m facility from a syndicate of four banks: HSBC, Barclays, Citibank and Commerzbank. The facility amortises by £10m 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 (£12.1m) + net venue utilisation (£1.5m))/(Headline PBT (£16.0m) - FX gain (£0.6m)) = 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

sqm'000

Revenue

£m

Gross Profit

£m

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 2018 (Unaudited)


Six months to 31 March 2017 (Unaudited)


Year ended 30 September 2017 (Audited)



Headline

 


Adjusting items

(note 3)


Statutory

 


Headline

 


Adjusting items

(note 3)


Statutory

 


Headline

 


Adjusting items

(note 3)


Statutory

 




















Notes

£000


£000


£000


£000


£000


£000


£000


£000


£000




















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
31 March 2018

Six months to
31 March 2017

Year ended 30 September 2017



Unaudited

Unaudited

Audited








£000

£000

£000






(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

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

Retained

Earnings

Put

Option

Reserve

Translation Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity















£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000














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

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

Retained

Earnings

Put

Option

Reserve

Translation Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity















£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000














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

Share

Premium

Account

Merger

Reserve

Capital

Redemption

Reserve

ESOT

Reserve

Retained

Earnings

Put

Option

Reserve

Translation Reserve

Hedge

Reserve

Total

Non

Controlling

interests

Total

Equity















£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000














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

2018

31 March

2017

30 September

2017



Unaudited

Unaudited

Audited


Notes

£000

£000

£000

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

to 31 March

2018

Six months

to 31 March

2017

Year ended

30 September

2017


Notes

Unaudited

Unaudited

Audited



£000

£000

£000

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 2018

Unaudited

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000








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 £75.4m includes £0.2m (six months to 31 March 2017: £0.2m; year ended 30 September 2017: £0.3m) 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 £2.3m;

·      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 2018

Unaudited

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000








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

to 31 March

2018

Six months

to 31 March

2017

Year ended

30 September

2017


£000

£000

£000





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:

 

As at 31 March 2018

Unaudited

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000

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 2017

Unaudited (restated)

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000








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 2017

Unaudited (restated)

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000








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:

 

As at 31 March 2017

Unaudited (restated)

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group


£000

£000

£000

£000

£000

£000

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)

 

Year ended 30 September 2017

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group

Audited

£000

£000

£000

£000

£000

£000








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)







 

 

Year ended 30 September 2017

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group

Audited

£000

£000

£000

£000

£000

£000








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:

As at 30 September 2017

Asia

Brands

Central Asia

Eastern & Southern Europe

Russia

Total
Group

Audited

£000

£000

£000

£000

£000

£000








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 to 31 March 2018

Six months to 31 March 2017

Year ended 30 September 2017


Six months to 31 March 2018

Six months to 31 March 2017

Year ended 30 September 2017



Unaudited

Unaudited

Audited


Unaudited

Unaudited

Audited



£000

£000 

£000


£000

£000 

£000










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
31 March 2018

Six months to
31 March 2017

Year ended 30 September 2017


Unaudited

Unaudited

Audited


£000

£000

£000

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
31 March 2018

Six months to
31 March 2017

Year ended 30 September 2017


Unaudited

Unaudited

Audited


£000

£000

£000

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
31 March 2018

Six months to
31 March 2017

Year ended

30 September 2017


Unaudited

Unaudited

Audited


Per

share

p

Settled in cash

£000

Settled in scrip

£000

Per

share

p

Settled in cash

£000

Settled in scrip

£000

Per

share

p

Settled in cash

£000

Settled in scrip

£000

 

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 £4.0m. 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

31 March 2018 Unaudited

Six months to

31 March 2017

Unaudited

Year ended 30 September 2017

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 £1.8m (31 March 2017: profit of £1.5m; 30 September 2017: loss of £8.2m). 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 £10.0m (31 March 2017: £10.2m; 30 September 2017: £21.5m). 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

£000

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 £2.2m 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

£000

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

£000

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

2018

Unaudited

31 March

2017

Unaudited

30 September 2017

Audited


£000

£000

£000





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

2018

Unaudited

31 March

2017

Unaudited

30 September 2017

Audited


£000

£000

£000





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 £100m facility from a syndicate of four banks, HSBC, Barclays, Citibank and Commerzbank. The facility amortises by £10.0m each year and expires in November 2021.

 

Total drawdowns under the facility of £77.4m at 31 March 2018 were denominated in sterling (£75.5m) and US dollars (£1.9m). At 31 March 2018 the Group had £22.6m (31 March 2017: £22.0m) 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 £50.0m of the debt (31 March 2017: £40.0m; 30 September 2017: £40.0m), 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

Unaudited

31 March 2017

Unaudited

30 September 2017

Audited


Notional

Fair value

Notional

Fair value

Notional

Fair value


£000

£000

£000

£000

£000

£000








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
£000

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

Unaudited

31 March 2017

Unaudited

30 September 2017

Audited


£000

£000

£000

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

2,693


__________

__________

__________

 

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





£000

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

 

 

 

At 1 October 2017

Cash flow

Foreign exchange

Cash and cash equivalents classified as held for sale

At 31 March 2018


£000

£000

£000

£000

£000







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 (£4.2m) 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 £0.3m (2017: £0.2m) 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
 
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