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16/05/2018 11:24:19 Webcast: Interim Results 2018

ITE Group CEO Mark Shashoua and CFO Andrew Beach present the company's H1 2018 Interim Results to analysts, with a Q&A session at the end of the presentation.

ITE Group CEO Mark Shashoua and CFO Andrew Beach present the company's H1 2018 Interim Results to analysts, with a Q&A session at the end of the presentation.

Watch the webcast here:

ITE Group Interim Results 2018: Webcast Presentation


15/05/2018 07:04:00 Interim Results 2018 & Acquisition Update

Today we announce our interim results for the six months ended 31 March 2018 and the proposed acquisition of Ascential Events Limited.


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 tax £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 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

>Download Interim Report (PDF)
> Download full statement (PDF)
> Interim results and acquisition update presentation (PDF)
> Video: Interim results and acquisition update (video)
15/05/2018 07:03:00 Video: Interim Results 2018 & Acquisition Update

ITE Group's Chief Executive Officer, Mark Shashoua, discusses today's interim results announcement & the proposed acquisition of Ascential Events


15/05/2018 07:02:00 Proposed £300 million Acquisition of Ascential Events

ITE today announces that it has entered into a conditional agreement to acquire Ascential Events Limited from Ascential plc, based on an enterprise value of £300 million.



THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, ANY OFFER, INVITATION OR RECOMMENDATION TO PURCHASE, SELL OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION AND NEITHER THE ISSUE OF THE INFORMATION NOR ANYTHING CONTAINED IN THIS ANNOUNCEMENT SHALL FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY INVESTMENT ACTIVITY. ANY DECISIONS TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY SECURITIES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE COMBINED CIRCULAR AND PROSPECTUS ONCE PUBLISHED.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.


ITE Group plc

Proposed £300 million acquisition of the Ascential Exhibitions Business
and fully underwritten rights issue

Summary

  • ITE Group plc today announces that it has entered into a conditional agreement to acquire Ascential Events Limited from Ascential plc, based on an enterprise value of £300 million (calculated on a cash-free debt-free basis and subject to normalised working capital).

  • The Ascential Exhibitions Business, which organises market-leading exhibitions that bring business communities together to connect and trade, includes two global industry-leading exhibitions brands, Bett and CWIEME, and a number of market-leading UK exhibitions brands such as the Spring and Autumn Fairs and Pure. In the financial year ended 31 December 2017, these brands generated revenues of £77.5 million and EBITDA of £24.0 million.

  • 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 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 in the Enlarged Group.

  • The Acquisition will also diversify ITE’s geographic footprint, giving rise to further opportunities for growth. In particular, the Directors believe that following the Acquisition, Bett and CWIEME will benefit from the leveraging of ITE’s wider geographic footprint and existing infrastructure, providing geo-cloning opportunities.

  • Attractive financial effects of the Acquisition:
    • Expected to be earnings enhancing in the first full year following Completion (FY2019)
    • The Directors expect to be able to maintain ITE’s existing dividend policy following Completion
    • Net debt / pro-forma 2017A EBITDA within target range of 1.5x – 2x

  • The Directors estimate that, following Completion, the Enlarged Group will be able to achieve annualised pre-tax gross cost synergies of £4 million - £5 million by implementing an integration plan that seeks to eliminate cost duplication, generate cost savings from economies of scale and drive operational efficiencies in the Ascential Exhibitions Business.

  • The Directors intend to re-invest £2 million - £2.5 million from FY2019, designed to drive additional revenue growth from FY2020 in part to realise a number of incremental revenue opportunities that are expected to arise as a result of the Acquisition. These include building the existing geo-clones to scale, additional geo-cloning of events into markets where ITE already has a local platform and where relevant, the cross-selling of events. In addition, further focus and investment will be made into visitor marketing to improve retention and customer ROI.

  • The Acquisition and related expenses are expected to be funded by the proceeds of a fully underwritten rights issue by ITE, which will raise up to approximately £315 million (before expenses). With respect to this rights issue, the Company has entered into a standby underwriting agreement with Investec Bank plc pending launch of the rights issue and publication of the combined circular and prospectus. Numis Securities Limited is expected to underwrite the Rights Issue with Investec Bank plc in due course.

  • The Company also intends to raise approximately £50 million through amending its existing debt facilities, which would allow it to reduce the Rights Issue to approximately £265 million (before expenses).

  • The Acquisition is a Class 1 transaction for ITE under the Listing Rules and is therefore conditional, inter alia, upon the approval by Shareholders. The Directors intend to unanimously recommend that ITE shareholders vote in favour of the resolutions to approve the Acquisition and to authorise ITE to proceed with the Rights Issue.

  • The Directors intend to take up their entitlements under the Rights Issue in full.

  • ITE expects to publish a combined circular and prospectus in connection with the Acquisition and the Rights Issue, including the notice of General Meeting in early June 2018. Subject to the satisfaction of the conditions to the Acquisition, Completion is expected to occur in July 2018.


Commenting on the Acquisition, Mark Shashoua, Chief Executive Officer of ITE, said:

“Today, we have announced an agreement to acquire a highly complementary portfolio of exhibitions from Ascential. Each show is market-leading and two are truly global. This acquisition accelerates our strategy of becoming product-led and building a portfolio of content-driven, must-attend events regardless of geography.

A number of our senior management team, including myself, know these assets extremely well and see a clear opportunity to drive cost synergies, and provide the investment, operational rigour and international platform required to drive growth. We expect the acquisition to be earnings enhancing during FY2019, our first full financial year of ownership, and our Board unanimously considers the acquisition and the rights issue to be in the best interests of ITE and its shareholders.”


This summary should be read in conjunction with the full text of this announcement. Terms defined in this summary have the same meaning when used in the full text of this announcement.

Enquiries:

ITE
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
Melissa McVeigh, Director of Communications
+44 (0) 20 7596 5017
Investec
(Sponsor, Financial Adviser, Joint Broker, Joint Bookrunner and Lead Underwriter)
Corporate Finance: Andrew Pinder, Junya Iwamoto, David Anderson
Corporate Broking: Sara Hale, Chris Sim, Neil Coleman
+44 (0) 20 7597 5970
Numis
(Joint Broker, Joint Bookrunner and Joint Underwriter)
Nick Westlake
Christopher Wilkinson
Toby Adcock
Hugo Rubinstein
+44 (0) 20 7260 1000
FTI Consulting
(Financial PR)
Charles Palmer
Emma Hall
 +44 (0) 20 3727 1000


1. Introduction

The Company today announces that it has entered into a conditional agreement to acquire the entire issued and to be issued share capital of Ascential Events Limited, which owns and operates the Ascential Exhibitions Business, based on an enterprise value of £300 million. In addition, the Company announces that it has entered into the Standby Underwriting Letter under which Investec has conditionally agreed to underwrite a rights issue by the Company to raise approximately £315 million (before expenses). Numis is also expected to underwrite the Rights Issue with Investec in due course.

The Target is the holding company of the Ascential Exhibitions Business, which organises market-leading exhibitions that bring business communities together to connect and trade. The Ascential Exhibitions Business includes two global industry-leading exhibitions brands, Bett and CWIEME, and a number of market-leading UK exhibitions brands such as the Spring and Autumn Fairs and Pure.

The Directors believe the Ascential Exhibitions Business is an attractive, high-quality portfolio of ‘must-attend’ exhibitions. The acquisition of the Ascential Exhibitions Business aligns with ITE’s TAG Programme and specifically its strategy of making product-led acquisitions of scalable events brands which the Directors believe offer strong growth potential under ITE’s ownership. The Acquisition will diversify ITE’s exposure to end-market verticals, creating a more balanced portfolio of events in the Enlarged Group, by adding market-leading events in a number of industry verticals including: education technology; coil winding, electric motor and transformer manufacturing technologies; home and gift; fashion and retail; broadcast and video; and gardening and outdoor living. The Acquisition will also diversify ITE’s geographic footprint, giving rise to further opportunities for growth. In particular, the Directors believe that following the Acquisition, Bett and CWIEME will benefit from leveraging ITE’s wider geographic footprint and existing infrastructure, providing geo-cloning opportunities.

The Acquisition, because of its size in relation to the Company, is a Class 1 transaction for ITE under the Listing Rules and is therefore conditional, inter alia, upon the approval by Shareholders.

The Company also announces today that it is in discussions with a view to increasing the size of its existing banking facilities such that it would be able to draw down £50 million from its debt facility to part fund the Acquisition, which would reduce the required size of the Rights Issue to £265 million. These arrangements are expected to be concluded by the time the Combined Circular and Prospectus is published and Rights Issue is formally launched.

The Board unanimously considers the Acquisition and the Rights Issue to be in the best interests of ITE and its Shareholders as a whole.

2. Background to and strategic rationale for the Acquisition

The ITE Group is a leading organiser of international trade exhibitions and conferences, specialising in organising ‘must-attend’ events that help to connect attendees to their target audiences around the world, making them the premier events in which to participate. Exhibitors use the ITE Group’s exhibitions and conferences as sales and marketing events, where they interact with visitors, promote new and existing products, generate leads and ultimately make sales, with the events acting as an industry platform bringing a business community together under one roof.

The ITE Group serves its communities of exhibitors, sponsors and delegates by helping them connect with and learn from their contemporaries and industry experts, and by creating and providing access to content that helps people and businesses make more informed decisions. The ITE Group organises over 200 exhibitions and conferences each year, many of which are market-leading events and well-known brands in key industry sectors, and is structured into five operating divisions based on: geographic location, being Asia, Central Asia, Eastern & Southern Europe, and Russia; and a brands division (“Brands”), a portfolio of international events brands.

In 2017, the ITE Group embarked upon a targeted and clear strategy: the TAG Programme. As reported in its results for the year ended 30 September 2017, good progress has been made on the TAG Programme, with operational and financial momentum leading to improved trading trends across the business. This operational and financial progress has continued through the first half of the 2018 financial year, as reported in its results for the six months ended 31 March 2018 announced earlier today.

2.1 ITE’s strategy – the TAG Programme

At the start of 2017, the ITE Group undertook a thorough and detailed review of its business, which included reviews by product, geography, structures, systems, sales, marketing, IT and finance. The outputs of this review, unveiled in May 2017, resulted in an evolved strategy and the introduction of the three year TAG Programme.

At the Group’s strategy update in May 2017, a new vision was announced: “To create the world’s leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers”.

The Group’s aim is to organise and run market-leading events by focusing on the needs of exhibitors and visitors and having a product-led strategy. To deliver this aim, the TAG Programme is being implemented across the Group and comprises three pillars:

a) create a scalable platform to generate real organic growth;
b) actively manage ITE’s portfolio; and
c) make selective product-led acquisitions.

a) Create a scalable platform to generate real organic growth

The Group is moving to a centralised and product-led model because the evolution of customer expectations means that local markets now expect events to be of a standard, international quality. Furthermore, global multinationals are starting to choose a single events company to exhibit with, that caters for them globally as a one-stop shop that is able to deliver a consistently high standard of service everywhere.

TAG Programme investments related to creating a scalable platform are spread across five areas: to create best practice functions and teams; invest in show operations; build capability and talent; drive a performance culture; and build and maintain fit for purpose IT infrastructure and systems.

b) Actively manage ITE’s portfolio

The Group has segmented its business into “Core” and “Non-Core” events to enable ITE management to increase its focus on events that are considered to present the greatest opportunities, whilst reducing distraction from others.

The Core events are those that the Directors believe are of strategic importance to the Group’s future, including the Group’s largest events and those with the greatest potential for growth. The Non-Core events consist of smaller shows which the Directors believe have less potential for growth.

As part of the Group’s strategy, a top priority remains to apply TAG Programme investments to its Core events, to realise their full potential. This strategy includes investing in content to drive greater customer experience for exhibitors and visitors, and improved customer retention.

The Group’s international sales teams have focused on ITE’s Core events and this has contributed to strong revenue growth from Core events as evidenced by combined double digit like-for-like revenue growth delivered from four of its top 10 events (by revenue) which occurred during the six months ended 31 March 2018.

During the year ended 30 September 2017, the Group discontinued 37 Non-Core events, with a further 22 discontinued in the six months ended 31 March 2018. On 24 April 2018, the Group also announced the disposal of TradeLink ITE Sdn. Bhd., owner of the Metaltech exhibition in Malaysia for £4.2 million, as a continuation of this pillar of the TAG Programme.

In line with its product-led strategy, the Group plans to continue to proactively review its portfolio on an ongoing basis.

c) Selective product-led acquisitions

The Group’s strategy includes making selective product-led, not geography-led, acquisitions that will be assessed on 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 the Acquisition fulfils these criteria.

2.2 The Acquisition and key benefits

The Directors believe that the strategic rationale for the Acquisition is compelling and in strong alignment with the TAG Programme.

The key rationales for, and benefits of, the Acquisition include:

The Ascential Exhibitions Business is a high-quality, product-led portfolio with global brands

The Ascential Exhibitions Business includes two global industry-leading events brands, Bett and CWIEME, and a number of market-leading UK events brands such as the Spring and Autumn Fairs and Pure.

Bett is the leading education technology series of global events and leadership summits. CWIEME is the leading global event for coil winding, electric motor and transformer manufacturing technologies. Spring and Autumn Fairs are the UK’s leading home and gift shows for the retail industry. Pure is London’s leading fashion trade show.

Bett and CWIEME are industry-leading global brands serving markets which the Directors believe are attractive end markets supported by structural growth drivers. Under ITE’s ownership, they are expected to benefit from exploiting ITE’s diversified geographic footprint and international infrastructure, better addressing existing customer demand which is currently unfulfilled.

Spring and Autumn Fairs, Pure and the other UK events brands being acquired are market leading, profitable and cash generative. Under ITE’s ownership, the Directors believe the events will benefit from dedicated management focus.

Strong growth potential of the Ascential Exhibitions Business under ITE’s management

The ITE CEO, Mark Shashoua, and COO, John Gulliver, will lead the integration and growth of the Enlarged Group after Completion. The ITE management team has a strong track record in the exhibitions and events market, Mark and John having previously held the positions of CEO and CFO of the Ascential Exhibitions Business respectively until early 2016.

The Directors believe the Ascential Exhibitions Business would have strong growth potential under ITE’s ownership because: (i) of Mark and John’s previous positions as CEO and CFO (respectively) until early 2016 providing them good insight into how to drive growth across the acquired events portfolio; (ii) given the scale of the Ascential Exhibitions Business brands, they will all form part of, and be managed as, Core events within ITE, receiving dedicated management focus and attention; and (iii) the ITE management team’s experience of, knowledge of and focus on the events industry.

In particular, for Spring and Autumn Fairs, Pure and the other UK events brands being acquired, ITE intends to refresh these events through focussing on delivering greater exhibitor return on investment, re-design of the event space and restructuring of the sales strategy.

The Directors believe that the ITE management team can create value and returns in the Enlarged Group by improving the customer experience, which is expected to result in exhibitor, attendance and yield growth.

The Directors believe that the Enlarged Group will be able to accrue considerable additional benefits from the sharing of best practice between ITE and the Ascential Exhibitions Business. Management intends to implement its best practices in the Enlarged Group as it believes there are opportunities to grow both its immature and mature events, if best practices are shared.

Operating synergies

ITE intends to implement an integration plan that seeks to eliminate cost duplication, generate cost savings from economies of scale and drive operational efficiencies in the Ascential Exhibitions Business.

In addition, ITE has identified a number of incremental revenue opportunities that are expected to arise as a result of the Acquisition, including cross-selling of sponsorship opportunities across the ITE events portfolio, customer cross-marketing of events, and geo-cloning of exhibition brands.

Delivering an enlarged ITE with a more diverse portfolio

As part of the TAG Programme, ITE has been focused on migrating from being a geographically structured business with strengths in emerging markets, to one that is product-led, with strong regional platforms. The Acquisition will diversify ITE’s business across geographic, currency and end-market vertical exposures.

As a result of the Acquisition, ITE’s portfolio will be significantly strengthened through the integration of the Ascential Exhibitions Business, by adding market-leading events in a number of industry verticals including: education technology; coil winding, electric motor and transformer manufacturing technologies; home and gift; fashion and retail; broadcast and video; and gardening and outdoor living.

The Ascential Exhibitions Business’ portfolio of seven events brands, combined with ITE’s over 200 events will position ITE as one of the largest owner/operators in the business-to-business face-to-face media segment. Within this, it will become one of the largest operators of exhibitions globally, according to data from AMR International. The Directors believe that the global market for exhibitions and events remains a highly attractive growth market, with AMR International estimating that the industry was worth $26.1 billion in 2017, with forecast growth at an annualised rate of 4.2 per cent. between 2016 and 2021, subject to regional variations.

Offers attractive financial returns

When making the decision to pursue the Acquisition, the ITE Directors considered a number of factors, which included the Ascential Exhibitions Business’ profitability margins, availability of realisable operating synergies, and the revenue growth opportunities realisable by ITE under its ownership.

The Acquisition will also reduce ITE’s exposure to Russia-based revenue, with the proportion of revenue from Russia reducing on a pro-forma basis  from approximately 47 per cent. to 31 per cent.

The Directors believe the Acquisition will be earnings enhancing in the first full financial year (ending 30 September 2019) following Completion.

3. Summary information on ITE Group

ITE Group was established in 1991 when it first held a series of trade exhibitions in Russia in key sectors of the economy, and through growth, acquisition and different phases of development, has become a leading organiser of international trade exhibitions and conferences.

The ITE Group specialises in organising events that help to connect attendees to their target audiences around the world. Exhibitors use the ITE Group’s exhibitions and conferences as sales and marketing events, where they interact with visitors, promote new and existing products, generate leads and ultimately make sales, with the events acting as an industry platform bringing a business community together under one roof.

The ITE Group serves its communities of exhibitors, sponsors and delegates by helping them connect with and learn from their contemporaries and industry experts, and by creating and providing access to content that helps people and businesses make more informed decisions. The ITE Group organises over 200 exhibitions and conferences each year, many of which are market-leading events and well-known brands in key industry sectors, and is structured into five operating divisions based on: geographic location, being Asia, Central Asia, Eastern & Southern Europe, and Russia; and Brands, a portfolio of international events brands.

ITE is currently the ninth largest conference and exhibition organiser by revenue, and has strong market positions in a number of emerging markets.

In FY2017, the ITE Group generated total revenues of £152.6 million and headline profit before tax of £31.6 million.

With its headquarters in London, the ITE Group employs 1,383 people across its 30 offices globally.

4. Summary information on the Ascential Exhibitions Business

The Ascential Exhibitions Business organises market-leading exhibitions that bring business communities together to connect and trade, with the events brands being Bett (including and The Education Show), CWIEME, the Spring and Autumn Fairs, Pure, Glee and BVE.

The Ascential Exhibitions Business operates within Ascential’s Exhibitions and Festivals division, which includes additional brands such as Cannes Lions and Money20/20 that are not being acquired as part of the Acquisition.

Bett is the leading educational technology series of global events and leadership summits. CWIEME is the leading global event for coil winding, electric motor and transformer manufacturing technologies. The Spring and Autumn Fairs are two of the UK’s leading home and gift shows for the retail industry. Pure is London’s leading fashion trade show.

In FY2017, the Ascential Exhibitions Business generated total revenues of £77.5 million and Adjusted EBITDA of £24.0 million  after removing results of events not being acquired, discontinued event revenue and profit, and on a constant currency basis.

With its headquarters in London, the Ascential Exhibitions Business employs 197 people across its four offices globally.

In FY2017, Ascential Events Limited, the holding company of the Ascential Exhibitions Business, generated Adjusted EBITDA of £23.1 million and had gross assets of approximately £58 million as at 31 December 2017.

5. Financial effects of the Acquisition

Cost savings and integration

The Directors estimate that, following Completion, the Enlarged Group will be able to achieve annualised pre-tax gross cost synergies of £4 million - £5 million by implementing an integration plan that seeks to eliminate cost duplication, generate cost savings from economies of scale and drive operational efficiencies in the Ascential Exhibitions Business.

The Directors intend to re-invest £2 million - £2.5 million from 2019, designed to drive additional revenue growth from FY2020 in part to realise a number of incremental revenue opportunities that are expected to arise as a result of the Acquisition. These include building the existing geo-clones to scale, additional geo-cloning of events into markets where ITE already has a local platform and where relevant, the cross-selling of events. In addition, further focus and investment will be made into visitor marketing to improve retention and customer ROI.

ITE has, together with its advisers, conducted due diligence on the Ascential Exhibitions Business, including having discussions with senior management, all of which has supplemented ITE’s existing knowledge of the Ascential Exhibitions Business. This diligence process coupled with ITE’s prior knowledge of the Ascential Exhibitions Business has enabled the ITE executive team to prepare their integration plan.

Leverage

The Company intends to raise approximately £50 million through amending its existing debt facility at the same pricing as ITE’s existing debt facility, which would allow it to reduce the Rights Issue to approximately £265 million.

Following Completion, and assuming the Rights Issue had completed and the amended bank facilities were fully drawn, the pro forma leverage as at 30 September 2017 for the Enlarged Group would have been within ITE’s stated target range of 1.5x to 2x EBITDA . The ITE Directors are expecting to be able to deleverage the business further during the year ending 30 September 2019.

6. ITE current trading and prospects

ITE has today published its interim results for the six months ended 31 March 2018.

Mark Shashoua, Chief Executive Officer, made the following comments in relation to the Company’s current trading and prospects:

“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.”


ITE continues to perform in line with the Board's expectations and the Board is confident of the financial and trading prospects of the Company for the current financial year.

7. Principal terms of the Acquisition

Under the terms of the Sale and Purchase Agreement, which is dated today, ITE Enterprises Limited (a subsidiary of the Company) has agreed to acquire the entire issued and to be issued share capital of the Target, the holding company for the Ascential Exhibitions Business based on an enterprise value (calculated on a cash-free debt-free basis and subject to normalised working capital) of £300 million. The consideration, which is payable in cash, will be adjusted, as required, following completion of Acquisition based on a completion accounts mechanism. The Acquisition is a Class 1 transaction for each of ITE and Ascential under Listing Rule 10.

The Acquisition is conditional, inter alia, upon obtaining the approval of Shareholders and of Ascential’s shareholders, the Standby Underwriting Letter or the underwriting agreement to be entered into in connection with the Rights Issue (and replacing the Standby Underwriting Letter), as the case may be, having become unconditional and not having been terminated, the Combined Circular and Prospectus being published and the new ordinary Shares to be issued under the Rights Issue being admitted to listing on the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities. The Sale and Purchase Agreement is terminable in certain circumstances, including in the event that the conditions are not satisfied by 13 June 2018, the Combined Circular and Prospectus has not been published by 13 June 2018, Ascential has not published its circular to its shareholders under Listing Rule 10 by 31 July 2018, the Standby Underwriting Letter or subsequent underwriting agreement is terminated, there is a material breach of the warranties given by the seller under the Sale and Purchase Agreement or there is material adverse change affecting the Ascential Exhibitions Business.

Under the Sale and Purchase Agreement, both the seller and the buyer have agree to pay a break fee to the other in certain circumstances, including in the event that the required shareholder approvals are not obtained or, in the case of ITE, the Standby Underwriting Agreement or subsequent underwriting agreement are terminated or fails to become unconditional. The obligations of ITE Enterprises Limited under the Sale and Purchase Agreement are guaranteed by the Company.

8. Principal terms of the Rights Issue

With respect to the Rights Issue, ITE has entered into the Standby Underwriting Letter. The Standby Underwriting Letter envisages a nominal value underwriting under which the number of new ordinary shares in the capital of ITE to be issued will be set by reference to an issue price to be agreed by ITE and Investec prior to publication of the Combined Circular and Prospectus. If the parties cannot agree, the appropriate number of shares will be issued at nominal value in order to achieve the desired fundraising amount. The Standby Underwriting Letter contains customary representations and warranties, undertakings, conditions and termination rights.

It is intended that prior to the Combined Circular and Prospectus being published, ITE will enter into an underwriting agreement with the Underwriters under which the Underwriters will underwrite the Rights Issue which is expected to raise approximately £265 million (on the basis that the Company's existing debt facilities are increased to allow £50m to be drawn down under the Group's debt facilities to part fund the Acquisition). If entered into, that underwriting agreement would replace the Standby Underwriting Letter.

The Rights Issue will not be conditional on completion of the Acquisition. If the Rights Issue were to proceed but the Acquisition does not complete the Directors’ current intention is that the proceeds of the Rights Issue will be applied to reducing the Company’s net indebtedness on a short-term basis while the Directors evaluate alternative uses of the funds. If no such uses can be found, the Directors will consider how best to return all or part of the proceeds to Shareholders. Such a return could carry fiscal costs for certain Shareholders, will have costs for ITE and would be subject to applicable securities laws.

9. Dividends

For FY2017, ITE paid a dividend of 4.0 pence per share (2016: 4.5 pence per share). For the six month period ended 31 March 2018, ITE has declared an interim dividend of 1.5 pence per share (2017: 1.5 pence per share).

The Directors understand the importance of dividend payments to Shareholders and intend to maintain ITE’s existing policy of declaring dividends at a coverage ratio of more than 2x headline earnings per share, subject to the Company having sufficient distributable reserves and cash available for this purpose.

10. Expected timetable to Completion

The Combined Circular and Prospectus containing further details on the Acquisition and Rights Issue, the Directors’ recommendation, the terms of the Rights Issue, the notice of General Meeting and the Resolutions is expected to be published in early June 2018. Subject to satisfaction of the conditions to the Acquisition, Completion is expected to occur in July 2018.

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04/04/2018 07:00:00 Trading Update

ITE is today publishing a trading update ahead of its interim results for the six months ended 31 March 2018, which will be announced on Tuesday 15 May 2018.


ITE is today publishing a trading update ahead of its interim results for the six months ended 31 March 2018, which will be announced on Tuesday 15 May 2018.

Trading update
The Group's performance in this period was in line with management expectations.

Revenue for the period will be circa £75m (six months to 31 March 2017: £70m). The increase is largely due to underlying trading improvements and the benefit of biennials and event timing, offset by the proactive cancellation of less profitable events and the impact of foreign exchange.

On a like-for-like basis revenues for the six months are 8% higher than the comparative period. Four Top 10 events ran in the period, collectively delivering double digit like-for-like revenue growth. This continues the double digit growth in Top 10 events in the previous financial year and reinforces our strategy of focusing on core market-leading events.

Financial position
The Group’s balance sheet and operational cash flows remain strong. Net debt is circa £52m (31 March 2017: £55m) reflecting continuing strong operational cash conversion and planned TAG investment in the period.

TAG programme update
We announced the TAG programme nearly a year ago and we continue to progress according to plan. The TAG Programme comprises of three pillars of strategic activity to accelerate growth, namely creating a scalable platform, managing the portfolio and making product-led acquisitions.

We have recruited the best practice teams and started to implement the ‘ITE way’ to increase the scalability of our platform. We have also rolled out seven best practice initiatives following the launch of our ‘Events Best Practice’ blueprints.

The Group is managing its portfolio by implementing a more rigorous approach to the allocation of capital. During the period we discontinued 22 less profitable events as we continue to focus on our core events.

The Group will also look to make selective product-led acquisitions to accelerate growth in line with strict M&A criteria and we have a strong acquisitions pipeline.

Outlook
As at 29 March 2018, the Group had booked circa £137m of revenue for the 2018 financial year (31 March 2017: £128m) representing 85% of market expectations for the full year. On a like-for-like basis, these revenues are 14% ahead of this time last year and on a volume basis are 5% ahead reflecting the impact of earlier bookings and ITE’s focus on core events following the launch of the early TAG initiatives.

With TAG well underway, ITE is making good progress 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.

The Board is pleased with performance to date and is confident in full year expectations.

Notes
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. This excludes:
  • 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).


For further information please contact:

ITE Group plc
Melissa McVeigh, Director of Communications
+44 (0) 20 7596 5017
FTI Consulting
Charles Palmer/Emma Hall 
+44 (0)20 3727 1000

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28/11/2017 10:30:00 2017 Preliminary Results Presentation

Our year-end results presentation is now available in PDF & Webcast formats.


Our year-end results presentation is now available to view and download.


Click here to view presentation
 
Click here to view webcast
 
ITE Preliminary Results Presentation ITE Preliminary Results Webcast


The preliminary results announcement and statement is also available - click here to view.
28/11/2017 07:00:00 2017 Preliminary Results Announcement

Today, we are pleased to announce our preliminary results for the year ended 30 September 2017 which show a return to growth after three years of difficult trading.

 
Return to growth after three years of difficult trading 
3 Year Transformation & Growth Programme (“TAG”) is on track

 
Financial highlights
 
Year to
30 September
2017
Year to
30 September
2016
Volume sales 679,900 m2 684,700 m2
Revenue £152.6m £134.4m
Headline profit before tax1 £31.6m £36.5m
Loss before tax £(3.2)m £(4.1)m
Headline diluted earnings per share2 8.1p 10.7p
Diluted earnings per share (3.1)p (3.6)p
Full year dividend per share 4.0p 4.5p
Net debt £49.7m £59.1m
 
  • Revenue of £152.6m; growth of 5% on a like-for-like3 basis for the first time in four years
  • Headline profit before tax of £31.6m, impacted by timing of events and the planned investment of the TAG programme
  • Statutory loss before tax; after non-cash impairments of goodwill and costs associated with the TAG programme
  • Moscow has stabilised, but a number of other regions remain challenged
  • Strong cash generation from new sales initiatives and reduced net debt by 16% to £49.7m
  • Full year dividend cover maintained at more than two times headline diluted earnings per share
  • Forward bookings4 of £98m already contracted for FY18, up 20% on a like-for-like basis

Strategy update
  • Comprehensive review of the strategy and business completed
  • 3 year Transformation & Growth (“TAG”) programme underway to create a scalable platform and drive organic growth
  • Investment of up to £20m to be funded by existing cash generation; anticipated strong ROI by 2020
  • Heads of best practice have been recruited
  • Focus on onsite rebooking at a number of Core events5 has proved successful
  • Traction evidenced in the growth across our Core events
  • TAG programme is on track, with signs of success from early initiatives

Mark Shashoua, CEO of ITE Group plc, commented:
 
“I am pleased to report that ITE has posted like-for-like revenue growth of 5% after three years of difficult trading. On our top ten events we have driven like-for-like top line growth of 15%. This growth in part reflects the successful rollout of the first phase of our TAG initiatives and our decision to focus on Core events that have the greatest capacity for growth. Whilst there have been challenging trading conditions in Russia outside of Moscow, Central Asia and in Turkey, we have seen the benefit of improved trading in Moscow. Our TAG programme is on track; during 2017 we have assembled the right team, structure and processes that we believe will lead to success. Even at this early stage, we are clearly seeing the benefits of our TAG initiatives, through growth in our Core events and forward bookings.

Our next financial year is underpinned by good visibility with circa. £98m of forward bookings, up 20% on last year on a like-for-like basis. ITE is well placed to realise 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. A fast pace has been set in the last year which we look forward to continuing into 2018 and beyond.”


Enquiries:
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
 
ITE Group plc 020 7596 5000
Charles Palmer/ Emma Hall FTI Consulting 020 3727 1000
Nick Westlake / Toby Adcock Numis 020 7260 1000


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 9 to the condensed consolidated financial statements for details.

3. 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).

4. Forward bookings are contracted revenues for the year ending 30 September 2018. These are the bookings as at 24 November 2017, unless otherwise stated.

5. 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.
 
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Chairman's Statement

I am pleased to introduce to shareholders the Group’s preliminary results announcement for the year ended 30 September 2017. These results demonstrate a return to growth in a year of substantial change.

A new vision for ITE

This was Mark Shashoua’s first full year as Chief Executive Officer and Andrew Beach joined early in the year as Chief Financial Officer. The new executive team and the Board have undertaken a full strategic review of the business to identify the optimum way forward for the Group. This review involved a number of specialist advisors working together with the senior management team, covering every aspect of the business and the recommendations were carefully considered by the Board.

The result of the review, unveiled in May, is an evolved strategy for the Group to generate organic growth focussed around our market leading events. This will involve significant investment in event content and marketing with the intention to make our leading shows ‘must visit’ events in their market sectors. The Group has also adopted a new ‘sales-led’ culture to drive revenue and has invested in a central best practice team to ensure that the Group is consistent in delivering a high-quality experience for exhibitors and visitors alike anywhere in the world.

Our TAG programme, which will see the Group invest up to £20m over the next three years with anticipated strong return on investment by 2020, was presented to a number of shareholders in May and we were pleased with the support it received. You will find more detail in the Chief Executive Officer’s statement.

Performance

Revenue was £152.6m (2016: £134.4m), growth of 5% on a like-for-like basis. This is the first year of like-for-like revenue growth for four years and a pleasing result from the implementation of the first initiatives of the Group’s new strategy. As expected, headline profit before tax was lower at £31.6m (2016: £36.5m) after the planned investment in the new TAG programme. Loss before tax was £3.2m (2016 loss before tax of £4.1m). Net debt has been reduced by 16% to £49.7m (2016: £59.1m). In Russia, and in particular in Moscow, there are good signs that the economy is improving after the geopolitical issues of recent years, yet we are still experiencing challenges in many of our other markets.

Dividends

Full year dividend cover has been maintained at more than two times headline earnings per share. The full year dividend per share is proposed at 4.0p (2016: 4.5p). With the current lower levels of Group profit and the TAG programme investment the Board believes this to be in the best long term interests of shareholders. The final dividend of 2.5p is proposed for payment on 5 February 2018 to shareholders on the register on 5 January 2018.

Board

The Board recognise that strong corporate governance is at the heart of a good business. We remain focussed on implementing robust processes that identify and mitigate risk and deliver best practice in the context of delivering on our promises to all of our stakeholders.

After five years tenure, Marco Sodi stepped down from the Board at the end of the financial year, having stepped down as Company Chairman in July 2017. Marco led the business through a difficult period and provided invaluable support to the management team through the design and launch of ITE’s new strategy. Marco leaves with the Board’s thanks and best wishes.

A search is underway to recruit a new Chairman to lead the business through the implementation of the TAG programme and the Board intends to further strengthen its non-executive team during the course of 2018.

Sharon Baylay has taken over as the Chairman of the Remuneration Committee for the coming year to allow Linda Jensen to focus on her role as Senior Independent Director.

Our people

ITE is a business whose success is dependent on the hard work and loyalty of all of its employees. It has been a challenging year as we have reviewed our operations and introduced new ways of working in many areas to position the Group for future success. These initiatives have been fully and positively embraced and, on behalf of the Board, I would like to take this opportunity to thank all of our 1,374 people for their continued commitment.

Outlook

We have allocated a significant amount of resource to the Group’s new strategy and have recruited a substantial, knowledgeable new team under the leadership of Mark Shashoua to implement this. The Board are pleased with the early signs as we seek to drive sustainable growth and shareholder value.

The Group enters the new financial year with a higher level of visibility, with forward bookings 20% ahead of last year on a like-for-like basis.

With its 3 year Transformation and Growth programme well underway, ITE is entering a period in the transformation that requires dynamic change. The Group has embraced the change to date with a renewed energy and an appetite for success, which is shared by the Board. With the potential for further improvement in both the geopolitical and economic markets in which we operate, the Board is confident for the future. ITE is well placed to realise 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.


Neil England
Chairman

Chief Executive's Statement


ITE’s performance in 2017 reflects a return to revenue growth following implementation of early TAG initiatives. Revenues for the year were £152.6m (2016: £134.4m), up 5% on a like-for-like basis. This is the first year of like-for-like revenue growth since 2013, driven by Russia, and in particular Moscow, where many of our Core events are located.

The reported loss before tax of £3.2m (2016: loss of £4.1m), was after including one-off restructuring costs of £5.0m (2016: £nil), £4.6m of which were incurred as part of the TAG programme, and impairment charges of £14.3m (2016: £26.5m).

Headline profit before tax was £31.6m (2016: £36.5m) and Headline diluted EPS was 8.1p (2016: 10.7p). Both of these measures reflect event timing differences and are after incurring costs associated with the TAG programme within headline results, in relation to the delivery of the Group’s new strategy.

After I joined the business on 1 September 2016, we set three main priorities for the year ended 30 September 2017. These were to:
  1. Complete a comprehensive review of the business in order to develop our future strategy and vision;
  2. Improve our trading position; and
  3. Set an operating rhythm to increase the operational rigour and breed a culture of success.

I am pleased to report clear progress has been made against each of these priorities and a firm commitment has been made to invest in our people, systems and products so we can deliver better experiences for our customers and accelerate growth.

Strategic Review and Evolution of our Strategy

At the start of the year we undertook a thorough and detailed review of the business, which included reviews by product, geography, structures, systems, sales, marketing, IT and finance. The outputs of this review, unveiled in May 2017 resulted in an evolved strategy and the introduction of a 3 year TAG programme.

At our strategy update in May, our new vision for the Group was announced: “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.

To deliver our vision, TAG is being implemented across the Group and comprises three pillars:
  • Create a scalable platform to generate real organic growth;
  • Actively managing our portfolio; and
  • Make selective product-led acquisitions

As part of our TAG programme we are investing up to £20m across the next three years, which, underpinned by a performance-led culture, will accelerate organic revenue growth as follows:

Create a scalable platform

Transformational levers and TAG investment will be spread across five areas to:
  • 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
  • Invest in show operations
    • Enhance customer retention and exhibitor reach, obtain enriched data insights and improve operational efficiency
  • Build capability and talent
    • Attract and retain talent, develop internal capabilities, and establish the right capabilities to drive business and adapt to market changes
  • 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
  • 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 a ‘One ITE way of working’

As part of creating a scalable platform, as a result of the above, the Group will move decisively from being a decentralised, geographically structured business to one that is more centralised and product-led with strong regional platforms. The evolution of customer expectations implies that every local market now expects events of a truly international quality. Global multinationals are starting to choose one events company that will cater for them globally, rather than a variety in different markets and the trend is towards a one-stop shop that is able to deliver a consistently high standard of service everywhere.

Early progress with implementing the strategy has been good; the framework for the TAG programme has been finalised, based around the five areas noted above. The governance for the programme has been set, the TAG programme team created and heads of best practice have been recruited.

Work is underway to develop an ‘ITE way’, creating a blueprint to run events that is consistent globally. With the ‘Best Practice’ team now established, the Group has implemented new performance management processes and sales incentive schemes, leading to demonstrable results as it transitions towards a sales-led performance culture.

One area of particular focus has been onsite rebooking at a number of Core events, and this has been successful in improving sales visibility into the next financial year.

Overall, the programme is progressing according to plan with implementation underway and progress evidenced across the five levers: 
Transformational Lever 2017 Progress 2018 Milestones
Create best practice functions and teams
  • New onsite rebooking strategy launched
  • Design of the ‘ITE way’
  • Complete design of the ‘ITE way’
  • Begin implementing the ‘ITE way’
Invest in show operations
  • Setup of Central customer success team
  • Setup of dedicated Central content team
  • Setup of Regional customer success team
  • Setup of dedicated Regional content team
  • Implementation of value-based pricing methods
  • Roll out of show ‘blueprint’
  • New show content deployed
Build capability and talent
  • Governance framework in place
  • Recruitment of key Central organisational roles
  • Roll out of dedicated specific training programmes
  • Recruitment of key Regional organisational roles
Drive a performance culture
  • New sales incentive scheme launched
  • Review of performance structure
  • Development of sales leadership
  • Standardisation of performance management
Build and maintain fit for purpose IT infrastructure and systems
  • Roll-out of new hardware under way
  • Systems design and development in progress
  • Launch of integrated sales and marketing systems
  • Completion of systems design and development
  • Systems deployed in phased waves

 

Actively manage the portfolio
 

The Group will continue to implement a more rigorous approach to allocation of capital.

Having deliberately segmented its business into Core and Non-Core, this development is enabling management to increase its focus on events that present the greatest opportunities whilst reducing distraction from smaller events.

The Core shows are of strategic importance to our future and include the Group’s largest shows, those with the greatest potential for growth and a number of smaller but strategically important shows. The Non-Core shows consist of smaller shows with less potential for growth.

As part of the Group’s strategy, a top priority remains to apply a full suite of transformational levers to its Core events to realise their full potential. This includes investing in content to drive great customer experience, retention and pricing. Each segment of the Group’s portfolio requires a different degree of focus and different transformational levers to maximise their growth.

Our international sales structures have been repositioned to focus on our Core market leading events and this has seen strong revenue growth which has offset the cancellation of smaller, Non-Core, low yielding events.

During the year we discontinued 37 unprofitable, or less profitable, shows. In line with its product-led strategy, the Group will continue to pro-actively review its portfolio on an ongoing basis.

Product-led acquisitions

In due course the Group will look 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.

Several criteria will determine what the Group will consider. Acquisitions are likely to meet most, but not necessarily all, of the following:

  • 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 Group is building a pipeline of product-led opportunities, but will only proceed if such opportunities meet most of these criteria.

Trading

Having focused our early efforts on sales and marketing initiatives in order to drive trading performance, I am pleased to report we have started to see tangible evidence of progress. All sales people across the Group have been set monthly sales targets and a new commission structure has been rolled out. This has led to monthly sales league tables which are continually reviewed and has enhanced visibility. We have also announced “Club Elite”. This initiative recognises and rewards our top sales talent on a quarterly basis and is instilling a culture of success. It has proven so effective that we have actively rolled this out across the Group to incorporate marketing, content and support services, enabling us to embed and reward high performing talent.   

I am pleased to say that these early initiatives have contributed to our performance as the Group has posted its first year of like-for-like revenue growth in four years.

Operating rhythm

Efforts to refocus the organisation on organic trading in the last year and embed a culture of engagement are well underway. For example, we have introduced weekly trading meetings, weekly review of sales, monthly regional boards, event level strategy pre and post show, and new global communication channels to showcase event successes globally, helping staff to feel part of “one ITE".

Philosophies

ITE’s approach is based on a view of what our customers want - and to be clear, customers include both exhibitors and visitors.
Customer needs are continually evolving. 

Return on Investment (“ROI”) is now a key metric for exhibitors and an increasing request to justify spend and demonstrate return. ROI is typically best delivered by attending the main event in any given sector, since that will deliver the largest and most relevant audience.

For visitors, Return on Time (“ROT”) is equally important. They don’t have time to visit every event and so they will choose the event that delivers the best ROT. ROT is also typically best delivered by the main event, with the largest number of exhibitors, content, networking opportunities and the best experience.

Running market leading events is therefore critical, and it is becoming harder and harder to successfully run second tier events, since they can’t compete on ROI or ROT. In response to this we are making content investment a priority. Visitors no longer want to attend events that act just as trading platforms. Good quality events have become places to learn, network, discuss and debate; they act as an industry platform, bringing a business community together under one roof.       

Visitors use events to gauge what their competitors are doing and where their industry is going, and so investing in high quality content – from distinguished keynote speakers to detailed technical seminars – is critical to engage and drive high quality audiences and senior levels of participation.

New technology has also impacted the industry. People once thought that technology would diminish the need for face to face events, but in reality it is the opposite. Technology has enabled organisers to be more efficient, engage better with our customers, and help them measure return on investment more effectively.

New technology also enables organisers to drive retention since improving events drives increases in retention rates for exhibitors and increases in visitor numbers. This in turn attracts new business. 
Retention in an events business is crucial. In order to focus on retention you need detailed customer insight and data analysis.

This ties directly into customer service, where earlier booking of exhibitors generally improves retention by helping them to prepare for a successful event.

Within the organisation itself, I believe in a strong performance based culture both in sales and marketing. Training, monitoring, managing performance and breeding a culture of success by rewarding achievement is the basis for strong sustainable organic growth.

We believe that a strong sales and marketing culture, with an emphasis on quality of events, retention and operational efficiency can drive sustainable growth and shareholder value.

Priorities for 2018

The Group has achieved much in a short space of time since we announced our evolved strategy and TAG programme. 2017 has put in place the building blocks and we believe that we have the elements in place to succeed. Now it is about rigorous attention to detail and execution of our plan. In the year ahead, our main focus within TAG will be on lead generation, content and customer service.

Outlook

Whilst we continue to roll out the TAG programme across our Core events, we remain focused on trading performance. The stabilisation of trading conditions in Moscow is having a positive impact on the outlook for next year, but is tempered by challenging trading conditions elsewhere in the markets in which we operate. As at 24 November 2017, the Group has contracted £98m of revenues in respect of 2018 events, compared to £81m at this stage last year in respect of 2017 events. This represents an increase of 20% on a like-for-like basis.

The Board remains confident of the Group’s prospects as it enters the new financial year. ITE is well placed to realise 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. A fast pace has been set in the last year which we look forward to continuing into 2018 and beyond.


Mark Shashoua
Chief Executive Officer


Chief Financial Officer’s statement

Overview

Revenues for the year were £152.6m (2016: £134.4m), as we delivered like-for-like growth for the first time since 2013, up 5%. This growth reflects the successful rollout of the first wave of our TAG initiatives, such as a new sales incentive structure, assisted by the stabilisation of Moscow and in spite of challenging trading conditions in some of our other markets. Our focus has been, and will continue to be, on our Core events and this is reflected in the growth experienced across our Core events in the year, which grew at a much faster rate than our Non-Core events. Looking ahead the TAG initiatives are also having a positive impact, with deferred income at 30 September 2017 of £82.6m (2016: £61.9m), with a significant proportion of the increase coming from the introduction of our new onsite rebooking initiative.

The Group reported losses before tax of £3.2m against a prior year loss before tax of £4.1m. This was after including one-off restructuring costs of £5.0m (2016: £nil), £4.6m of which were incurred as part of the TAG programme, and impairment charges of £14.3m (2016: £26.5m).

Headline profit before tax is a non-statutory measure of performance used by the Group as it better reflects underlying trading performance. After excluding adjusting items, detailed below, headline profit before tax was £31.6m (2016: £36.5m). Included within headline profits were £2.8m of costs associated with the TAG programme, such as the best practice teams and the impact of changes to the sales commission structure. On a like-for-like basis headline profit before tax has grown by 2%, reversing the trend reported in recent years.

Basic and diluted earnings per share were (3.1)p (2016: (3.6)p). The Group achieved headline diluted earnings per share of 8.1p (2016: 10.7p), with the decrease largely due to the reduction in headline profits in the year and the increase in the Group’s effective tax rate, which is discussed in more detail below.

Group operating cash conversion for the year was 134% (2016: 112%). The significant increase is largely as a result of the onsite rebooking initiative, which has brought our cash inflows forward, and also from an increase in forward bookings for next year’s events attributable to an upturn in trading, particularly across our Core events. Net debt at the year-end has reduced to £49.7m from £59.1m at 30 September 2016 as a result of strong cash flows from operations. The Group’s £6.7m cash investment in the new TAG programme, £10.1m of previously committed acquisition and transaction costs and £8.7m of dividend payments to shareholders have been funded entirely through cash flows from operations.

A refinancing of the Group’s external debt facility was completed in 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, giving us certainty over funding through the life of the TAG programme. The facility has more favourable pricing and more appropriate covenants, including a leverage ratio which is now assessed on a net debt to EBITDA basis, replacing the gross debt covenant in place under the previous facility. The facility is also structured to allow the flexibility we require to achieve our plans, including larger acquisition baskets and more flexible use of disposal proceeds.

Trading summary

In 2017 the Group ran 234 events (2016: 252). The decrease is primarily attributable to cancellations of smaller, less profitable events. A detailed analysis of volumes and revenues is presented below:

   

Square Metres Sold

(000)

 

Revenue

£m

 

Average Yield

£ per m

 

2016


All events


685


 


134.4


 


196


 

  Biennial (41)   (4.6)      
  Timing (12)   (4.5)      
  Non-recurring (34)   (4.9)      
  Disposals .   (0.5)      

2016


Annually recurring


598


 


119.9


 


201


 

  Acquisition 49   6.0      
  Launches 18   3.2      
  FX translation .   11.6      
  TAG costs .   .      
  Like-for-like growth (2)   6.7      

2017


Annually recurring


663


 


147.4


 


222


 

  Timing 3   0.8      
  Biennial 14   4.4      

2017


All events


680


 


152.6


 


224


 


 


 


 


 


 


 


 


 


Segmental results

£'m Revenue Headline profit before tax
  2017 2016 2017 2016
Russia 71.4 51.6 26.3 19.8
Asia 23.8 17.1 6.9 5.5
Central Asia 21.7 22.0 6.5 7.0
Eastern & Southern Europe 17.0 19.3 4.8 5.6
Brands 18.7 24.4 5.4 11.0
Other income . . 0.7 0.6
Central costs . . (16.2) (11.9)
Foreign exchange gain . . 0.3 2.0
Net finance costs . . (3.1) (3.1)
Total 152.6 134.4 31.6 36.5

Refer to the ‘Divisional trading summary’ section for commentary on each operating segment.

Other income relates primarily to rental income from sub-leasing unused office space.

Central costs include all costs that are not allocated to the Group’s operating segments when headline profit before tax is reported to the Senior Operating Board for the purposes of allocating resource and making strategic decisions. These include the Group’s corporate overheads and other central costs that are included within cost of sales. The corporate overheads are the costs of running the head office in London and are primarily comprised of the staff costs, which include the Group’s executive and non-executive directors, depreciation of the Group’s centrally held assets, office rent and professional fees. The other central costs included within cost of sales include digital marketing costs that are not event-specific, but span the Group’s portfolio of events. The increase in central costs in 2017 is partly due to higher bonus payments in the year, an element of which is paid based on the achievement of target Group results for the financial year.

Central costs in 2017 also include £1.3m of TAG costs and £1.4m of central structure costs. Of the £2.8m of costs associated with the TAG programme that have been included within headline results, £1.3m do not directly relate to the reportable segments and have been recognised within central costs. The central structure costs represent costs in London that were primarily incurred prior to the launch of the TAG programme to ensure that we were positioned appropriately to determine the Group’s new strategic direction and ultimately to implement it successfully. These include the staff costs and recruitment costs of the new Strategy Team and the CFO, to the extent that there was no comparable cost in the prior year.

The foreign exchange gain represents the retranslation of monetary assets and liabilities held in our subsidiary companies that are denominated in currencies other than the functional currencies of the subsidiaries. See the ‘Foreign exchange’ section below for further details.

Net finance costs relate to the interest payable on our external banking facility and bank fees, net of interest income for the period.

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.

With the exception of restructuring costs, the adjusting items presented are consistent with those presented in the previous year. The restructuring costs have been presented separately in order to report what the Board consider to be the most appropriate measure of underlying performance of the Group and to provide additional information on the scale and progress of the Group’s transformation programme.

Reconciliation of loss before tax to headline profit before tax:
£'m 2017 2016
Loss before tax (3.2) (4.1)
Operating items    
Amortisation of acquired intangible assets 14.1 15.5
Impairment of goodwill and intangible assets 12.6 24.7
Impairment of investments in associates and joint ventures 1.7 1.9
Transaction costs on completed and pending acquisitions 0.4 0.3
Loss on disposal of investments 3.7 1.5
Restructuring costs, including TAG 5.0 .
Tax on income from associates & joint ventures 1.5 1.1
Financing items    
Revaluation of liabilities on completed acquisitions (4.2) (1.2)
     
Headline profit before tax 31.6 36.5


Amortisation of acquired intangible assets

Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. The charge has declined in the year as a result of a number of our historical Russian intangible assets reaching the end of their estimated useful lives, offset in part by the amortisation on the intangible assets recognised on completion of the acquisition of Gehua in the year. See the ‘Portfolio management’ section below for further details on the Gehua acquisition.

Impairment of goodwill and intangible assets

In the year, impairment charges were recognised in respect of our India, Turkey, and Africa Oil Week (“AOW”) cash generating units (“CGUs”). Recent trading in these CGUs has improved. However, the forecast cash flows include an increase in the central cost allocation following our move to a more centralised model and an update to the discount rate methodology, which, when coupled with the low headroom of these CGUs, results in the value in use not being sufficient to support the carrying value of the assets. Prior to these changes, the Turkey and AOW CGUs had lower headroom as a result of the adverse macro-economic and geopolitical conditions faced in the last few years in Turkey and the significant downturn in the oil price in 2015, which has affected our AOW oil conference in South Africa. The India CGU had lower headroom due to the write down of the assets to the value in use of the CGU in the prior year. As well as the impairment charge recognised at our India CGU last year, the prior year charge also included impairments of our South East Asia and Siberia CGUs.

Impairment of investments in associates and joint ventures

The current year charge is recognised in respect of our Indonesian joint venture, following the update to the discount rate methodology in determining value in use discussed above. In the prior year we impaired our investment in our Malaysian joint venture.

Transaction costs on completed and pending acquisitions

Transaction costs on completed and pending acquisitions relates principally to costs incurred on the Gehua acquisition completed in December 2016.

Loss on disposal of investments

During the year the Group disposed of its investment in Gima International Exhibition Group GmbH & Co KG (“GiMA”), a sales agency business based in Germany. As a result of the disposal the goodwill held on the balance sheet from the original acquisition of GiMA, over a decade ago, this has resulted in the recognition of a loss on disposal.

Restructuring costs, including TAG

Restructuring costs relate to costs incurred in transforming the business, and largely relate to the TAG programme. The costs included within adjusting items are the one-off costs of designing and implementing the Group’s new strategy. The most significant of these costs are professional and consultancy fees incurred in relation to the strategic and business reviews carried out on the existing business and underlying markets, the costs of designing the Group’s new strategy and its future operating model, and the costs of implementing the new strategic initiatives launched to date.

The TAG programme has led to certain costs, such as those associated with new best practice roles and changes to the sales commission structure, that are expected to remain as part of the Group’s new operating model post-transformation. These costs have not been included within adjusting items and are presented within headline results.

Tax on income from associates and joint ventures

Statutory reported profits from associates and joint ventures are presented post-tax. In order to present a measure of profit before tax for the Group that is purely pre-tax, the tax on associate and joint venture profits is added back. The year-on-year increase reflects the increase in profits from associates and joint ventures this year, primarily due to strong performance from Sinostar and ITEMF, as discussed further below.

Revaluation of liabilities on completed acquisitions

A number of the Group’s acquisitions completed in recent years have future earn-out commitments, either through deferred or contingent consideration payments or through equity option liabilities to increase our current shareholdings. These are held on the balance sheet at fair value and therefore change based on the latest foreign exchange rates, the proximity of the settlement date and the latest expectation of the settlement value. All such revaluations are presented outside of adjusted results as they do not relate to the underlying performance of the Group. Revaluation of liabilities on completed acquisitions include the revaluation of the equity option liabilities in respect of ABEC and ITE Ebseek (“Fasteners”) and the revaluation of contingent consideration in respect of Gehua and Fasteners, prior to the settlements of these obligations in the year.

Foreign exchange

As a result of the territories in which we operate, we are exposed to changes in foreign exchange rates and significant movements, particularly in the Russian ruble, can have a significant impact on our results.

Translational FX

Each month our subsidiary company results are translated into sterling, from the functional currencies of the subsidiary companies, on consolidation, using the prevailing foreign exchange rates for the month. Changes in foreign exchange rates result in fluctuations of the level of profits reported for the Group. The impact of the changes in foreign exchange rates is included within both the statutory and adjusted reported results, within the relevant lines in the Consolidated Income Statement. To aid comparability of trading results, when presenting like-for-like performance we adjust for the impact of changes in foreign exchange rates on translation.

Largely as a result of the strengthening of the ruble against sterling, the reported results were higher than in the comparative period by £11.6m for revenue and £2.4m for headline profit before tax.

Transactional FX

As well as translational foreign exchange movements arising on consolidation, the Group results are impacted by changes in foreign exchange rates within our subsidiary company results. Where monetary transactions are entered into in different currencies than the functional currency of the entity this gives rise to revaluation gains and losses following changes in exchange rates between the transaction date, month end and the settlement date. Each revaluation of the monetary assets and liabilities held on the balance sheet results in gains and losses, which are reported within the Consolidated Income Statement within the ‘Foreign exchange gain on operating activities’ line.

The relative stability of the ruble throughout 2017, when compared to 2016, has contributed to the smaller gain recognised of £0.3m (2016: £2.0m). As a result of the Uzbekistan government removing the som peg to the US dollar in September, a gain on revaluation of £0.7m arose in the month, as a result largely of the US dollar debtor book held locally in our Uzbekistan subsidiary companies.

In order to minimise our exposure to changes in foreign exchange rates, particularly on euro denominated cash inflows held in sterling subsidiary companies, which accounts for approximately 15-20% of total revenues, the Group takes out foreign exchange forward contracts to provide certainty over the future euro cash inflows. The gains and losses on the forward contracts are deferred and recognised within revenue at the point at which the revenue is recognised.

In the year, a loss of £0.7m (2016: profit of £2.0m) was recognised within revenue in respect of our forward contracts, reflecting the strengthening of the euro against sterling in the year, naturally offsetting the benefit received from this strengthening within our reported revenues.

Foreign currency translation reserve

Finally, our results are impacted by the translation of the subsidiary company balance sheets each month on consolidation into sterling. A change in foreign exchange rates gives rise to a movement which is recognised within reserves in the foreign currency translation reserve. This is on translation of the company balance sheets of our subsidiary companies, which are reported in their functional currencies before being translated into sterling on consolidation, at the prevailing period end rates.

The foreign currency translation reserve increased by £3.0m, largely due to the weakening of the Turkish lira and the Uzbekistani som against sterling between the beginning and the end of the financial year. Due to the considerable goodwill and intangible assets held in Turkey, as well as the dollar denominated debtors in Uzbekistan, the value of the net assets within the consolidated statement of financial position have reduced. This was offset to some extent by a strengthening of the ruble and euro but these movements were not of sufficient magnitude to prevent a loss being recognised within equity reserves.

Share of results of associates and joint ventures

Profits after taxation for the financial year arising from investments in joint ventures and associates increased by £1.5m to £5.1m (2016: £3.6m). Sinostar (our 50% owned Chinese joint venture) continues to perform well whilst ITEMF (our 50% owned joint venture in Russia) has benefited from the stabilisation in Moscow and a strengthening of the Russian ruble.

Finance costs

Statutory net finance costs are £1.0m (2016: net finance income of £1.8m). On a headline basis, after excluding the revaluations relating to liabilities on completed acquisitions, net finance costs are £3.1m (2016: £3.1m). These represent the interest cost on the Group’s borrowings of £2.5m (2016: £2.4m) and bank charges of £1.3m (2016: £1.1m), net of interest income of £0.7m (2016: £0.4m).

Tax charge

A tax charge of £3.3m (2016: £3.1m) was recognised in the year. Tax on associate and joint venture profits, which is presented within the share of profit from associates and joint ventures, was £1.5m (2016: £1.1m), reflecting the higher level of joint venture profits discussed above. The total tax charge was £4.8m (2016: £4.2m).

The headline tax charge for the period was £8.3m (2016: £7.1m), equating to a headline effective tax rate of 26% (2016: 19%). The increase in the tax rate was primarily due to an increase in withholding tax on dividends from our Russian subsidiaries, following the stabilisation of trading in Moscow.

Profits attributable to non-controlling interests (“NCIs”)

NCI profits for the year were £1.8m (2016: £2.2m), down £0.4m. In May 2016 we increased our interest in Africa Oil Week to 75% and in May 2017 to 100%, reducing the proportion of profits attributable to NCI for the event that runs each October. This was offset by the first-time impact of the 40% of ABEC’s profits that were pre-acquisition in the prior year and the 30% of the post-acquisition profits from the current period acquisition of Gehua.

Consolidated Statement of Financial Position

The Group’s Consolidated Statement of Financial Position at 30 September 2017 is summarised in the table below:

 

30th September 2017 30th September 2016
  Net assets
£m
Net assets
£m
Goodwill and other intangible assets 154.4 166.7
Interests in associates and joint ventures 45.5 45.7
Other non-current assets 11.7 8.4
Total non-current assets 211.6 222.8
     
Trade debtors 44.1 32.5
Cash 23.3 15.5
Other current assets 20.2 20.2
Total current assets 87.6 68.2
     
Deferred income 82.6 61.9
Bank loan 73.0 74.6
Other liabilities 54.3 58.2
Total liabilities 208.9 194.7
     
Share capital and share premium 31.3 23.3
Translation reserve (45.3) (42.3)
Other reserves 81.6 89.9
NCI 22.7 25.4
Total equity 90.3 96.3

 



Total non-current assets

Goodwill and intangible assets decreased during the year due to the impairments recognised in the India, Turkey and AOW CGUs, the annual amortisation charge in respect of the intangible assets and the retranslation of overseas balances to sterling at year end exchange rates. The movement was offset to some extent by the acquisition of Gehua. The intangible assets balance represents acquired customer relationships, trademarks and licences, visitor databases and computer software.

Interests in associates and joint ventures has remained flat, with strong profitability in the larger joint ventures, particularly Sinostar and ITEMF, offset by the payment of dividends from these entities and the impairment of the Indonesian joint venture.

Other non-current assets has increased for the most part due to an increase in deferred tax asset to £5.4m (2016: £3.1m).

Total current assets

Trade debtors increased compared to the prior year as a result of the increase in forward bookings, aided by our new onsite rebooking initiative. This contributed to trade debtors increasing by over 30% year on year. Trade debtor recoverability remains strong and cash flow from operations and cash collection have been important areas of focus over the past year.

Cash balances increased to £23.3m (2016: £15.5m) as a result of earlier cash collection following the onsite rebooking initiative, reduced expenditure on acquisitions compared to previous years and the strengthening of foreign currencies against sterling which create unrealised gains when translated into sterling on consolidation. This was in part offset by the investment in TAG during the year.

Other current assets, comprising other debtors, prepayments and tax prepayments, have remained broadly consistent year on year.

Total liabilities

As with trade debtors, deferred income grew considerably following the introduction of our onsite rebooking initiatives, with the balance as at 30 September 2017 being £82.6m (2016: £61.9m), up by over 30% year on year. This represents 54% of the total revenue recognised in 2017, compared to 41% of the 2017 revenues being contracted at this stage last year.

The bank loan balance of £73.0m (2016: £74.6m) is broadly flat year on year. A new loan facility agreement was entered into subsequent to the year-end as mentioned previously.

Other liabilities decreased to £54.3m (2016: £58.2m). The decline is primarily in respect of equity option liabilities and deferred/contingent consideration, following the exercise of the Africa Oil Week put option in May 2017 and settlement of earn-out obligations in respect of ABEC and Fasteners.

Total equity

During the year the Company issued 7,140,601 (2016: 5,166,043) ordinary shares of 1p. 2,050,102 of the total new issues were to shareholders who elected to receive their dividend in the form of new ordinary shares as part of the scrip dividend alternative that was made available. The remaining shares issued were consideration for the exercise of options to acquire the remaining 25% stake in Africa Oil Week (2,791,120) not previously held and the element of the Gehua consideration settled in shares (2,299,379).

As at 30 September 2017 the Employee Share Ownership Trust (ESOT) held 2,783,585 (1.0%) of the Company’s issued share capital (2016: 2,869,603 (1.1%)).

The movement in the translation reserve from a debit balance of £42.3m to £45.3m represents the loss on the year-end retranslation of the Group’s overseas assets denominated in foreign currencies, as discussed above. This is driven primarily by movements in the sterling/lira and sterling/som exchange rates. The decreases in the put option reserve and NCI were caused by the exercise of the Africa Oil Week equity option. The Group’s ability to pay dividends is secure, with distributable reserves in the parent Company accounts of £16.8m.

Venue arrangements

The Group has long-term arrangements with its principal venues in its main markets setting out ITE’s rights over future venue use and pricing.

The arrangements can take the form of a prepayment of future venue fees (‘advance payment’), or a loan which can be repaid in cash or by offset against future venue fees (‘venue loan’). Generally, the arrangements bring rights over future venue use and advantageous pricing arrangements through long-term agreements. Venue advances and prepayments are included in the Consolidated Statement of Financial Position under non-current and current assets.

Portfolio management

On 9 December 2016, the Group acquired a 70% holding in ITE Gehua Exhibitions Co Ltd (“Gehua”), a company incorporated in China, for total consideration of £11.7m. No put or call options exist over the remaining 30% stake. The acquired business has contributed £3.0m to Group revenue and a £1.0m to headline profit before tax since acquisition.

During the year, £3.7m was paid in respect of deferred and contingent consideration obligations in respect of the acquisitions of ABEC and Fasteners completed in previous years and of Gehua in the current period. At 30 September 2017 there remains an outstanding obligation of £1.0m in respect of the acquisition of ABEC.

One equity option was settled during the year, in respect of the remaining 25% in Africa Oil Week, discussed above. At 30 September 2017, equity options are held over further interests in our subsidiary companies, ABEC, Fasteners and Scoop, and our joint venture companies, ECMI and Debindo.

As part of our ongoing focus on Core events, 37 events were cancelled in 2017 which had in 2016 contributed £1.1m to Group revenue and £0.4m to headline profit.

TAG overview

In May 2017, we announced our intention to invest up to £20m in the TAG programme over the three year transformation period. In 2017 we invested £5.0m, comprised of £4.6m of one-off restructuring costs, which are presented within adjusting items, and £0.4m of capital expenditure. The restructuring costs were principally in relation to the design and implementation of the Group’s new strategy. The capital expenditure largely related to building fit for purpose IT infrastructure and systems. Having invested £5.0m since May, we anticipate investing up to £10m over the coming financial year. The investment will reflect the acceleration of our systems design and development work over the coming 12 months and ultimately the introduction of the new sales and marketing systems that will help us create fit for purpose IT infrastructure & systems. We remain confident of delivering the overall TAG programme within the 20m one-off investment indicated.

During 2017, £2.8m of costs were included within our statutory and headline results in relation to the TAG programme. These represent costs that are associated with the TAG programme, in relation to the delivery of the Group’s new strategy, rather than the costs of designing and implementing the strategy. These are costs that have arisen following changes to the way we operate as a result of the TAG programme and are expected to continue to be incurred as the Group’s new operating model becomes fully embedded. Of the £2.8m incurred in the year, £1.9m was included within cost of sales (£0.5m of which was included within central costs) and £0.9m is included within overheads (£0.8m within central costs). The cost of sales represent costs incurred to date that are direct costs incurred to drive revenue growth, to date principally in future periods. Overhead costs are ongoing costs largely incurred in relation to creating best practice functions and teams and building capability and talent.


Andrew Beach
Chief Financial Officer
 


Divisional trading summary

Russia

 

2017
£'m

2016
£'m
% change

% change
like-for-like

Revenue 71.4 51.6 +38% +14%
Headline profit before tax 26.3 19.8 +33% +17%









During the year ITE held 96 events in Russia (2016: 110), with total volume sales of 274,400m2 (2016: 256,000m2). Revenue of £71.4m was 38% higher than the previous year and headline profit before tax of £26.3m was 33% higher than the previous year, reflecting early TAG benefits, stabilisation of the trading environment – particularly in Moscow – and the strengthening of the Russian ruble. On a like-for-like basis volume sales in Russia increased by 9%, revenues increased by 14% and headline profits before tax increased by 17% from the prior year.

Moscow is ITE’s largest office in Russia with events accounting for around 74% of the region’s revenues. Volume sales for the year on Moscow events were 182,300m2 (2016: 164,100m2); an increase of 9% on a like-for-like basis.

ITE’s leading events in Moscow responded favourably to the stabilisation of the trading environment and benefitted from management’s reallocation of resources to focus on these events. The Moscow International Travel and Tourism (MITT) exhibition which is held annually in March delivered sales of 13,700m2 (2016: 11,700m2) as the Russian international tourism sector recovered confidence and relations between Turkey and Russia improved. In April, Mosbuild (WorldBuild Moscow) saw volumes increase by 8% to 34,500m2 (2016: 31,800m2) with the growth being led by domestic exhibitors as the construction sector in Moscow also gained confidence from the stabilisation in the local economy. The packaging event, Rosupack, also performed strongly with volume growth of 21% from 9,400m2 to 11,400m2. However the recovery was uneven across sectors with the logistics event TransRussia and the security event Securika reporting flat volumes of 7,400m2 (2016: 7,200m2) and 10,400m2 (2016: 10,600m2) respectively. The previously biennial Moscow International Oil & Gas Exhibition (MIOGE) annualised and changed venues to better respond to a competitive launch and met expectations in delivering volumes of 12,000m2 (2015 event: 18,500m2). WorldFood Moscow in September also grew volumes by 5% to 21,300m2 (2016: 20,200m2), as both domestic exhibitors and international suppliers increased their space requirements.

The Krasnodar region in southwest Russia is one of the most prosperous outside Moscow. The Group is the anchor tenant at the City’s exhibition centre and runs events across a broad range of sectors. The single largest event is the agriculture event, Yugagro, which grew by 9% to 31,700m2 (2016: 29,000m2).

The stabilisation of the economic environment in Moscow has not yet spread to all regions. The Group’s events in St Petersburg delivered overall volume sales of 9,400m2 (2016: 9,500m2), a like-for-like decline of 7%. 

In Novosibirsk, Siberia, ITE is the anchor tenant in the city’s main venue. During the year management reduced the number of events held to 22 (2016: 34). On a like-for-like basis, which excludes these cancellations, revenue was down 1%.

Asia

  2017
£'m
2016
£'m
% change % change
like-for-like
Revenue 23.8 17.1 +39% -3%
Headline profit before tax 6.8 5.5 +23% +16%








The Group’s operations in this region are based in India, China and South East Asia. During the year, the Group ran 35 (2016: 27) events in the region. Overall the group’s majority owned businesses in the region sold 160,000m2 in 2017 (2016: 124,600m2), reflecting acquisitions in China offsetting the weaker biennial pattern and the challenging trading environment in India. The Group benefitted from another strong performance by its Sinostar joint venture, which is not included in consolidated revenues but is included in consolidated headline profits before tax for the region. Therefore, on a like-for-like basis the region reports a decrease of 2% in volumes and 3% in revenues but a 16% increase in headline profits before tax.

The Group operates two businesses in India: one through a small wholly-owned subsidiary, ITE India, which had its weaker biennial year in 2017 and the other through ABEC, India’s largest private exhibition organiser in which ITE has a 60% stake. ABEC’s portfolio of over 20 exhibitions across different industry sectors includes Acetech – India’s leading construction event. Acetech Mumbai in October 2016 delivered 27,800m2 (2016: 27,900) despite the impact of demonetisation, although the impact on the rest of the ABEC portfolio was more pronounced and the business delivered like-for-like volume and revenue declines of 3% and 4% respectively, reflecting the challenges faced in the market.

In China the Group has offices in Beijing, Shanghai and Guangzhou and operates (through its Hong Kong headquartered 50% joint venture partner Sinostar) the Chinacoat/Surface Finishing China event. The November 2016 Chinacoat/Surface Finishing China event in Guangzhou saw 11% growth on the equivalent event reporting record sales of over 37,800m2 with another strong performance expected at the November 2017 event. A 70% stake in Gehua was acquired in December 2016. It has a small portfolio of events, of which the major event is a Food event which ran in August 2017 for the first time under ITE ownership, delivering 20,000m2. The Group’s Fasteners event, acquired in 2016, grew by 10% to 16,300m2 (2016: 14,800m2). 

In South East Asia the Group operates through three organisations based in Indonesia and Malaysia. In Jakarta, Indonesia, the Group owns 50% of PT Debindo which runs the Indobuildtech series of construction exhibitions, the largest of which takes place annually in Jakarta. After moving to the new International Convention and Exhibition Centre last year and growing to over 22,000m2, this year the event focused on driving yield and while volumes reduced slightly to 18,700m2, the revenues increased by over 10%. In Kuala Lumpur, Malaysia the Group owns 100% of Tradelink, which runs the Metaltech event, serving the machine tool technology and metal fabrication industries. The event takes place each May in Kuala Lumpur and although volumes reduced, revenues held up despite local economic uncertainty impacting on the industry. Also based in Kuala Lumpur is the Group’s 50% joint venture, ECMI, a pan-ASEAN organiser operating in Malaysia, Indonesia, Vietnam and Myanmar, and focused on the professional beauty and life-sciences sectors.

Central Asia
 

  2017
£'m
2016
£'m
% change % change
like-for-like
Revenue 21.7 22.0 -1% +5%
Headline profit before tax 6.5 7.0 -7% +7%


ITE’s principal offices in Central Asia are in Kazakhstan, Azerbaijan and Uzbekistan. All of the economies in this region are heavily dependent on oil and gas for their overseas earnings and economic wealth and in the case of Kazakhstan a significant level of trade with Russia as well. The fall in the oil price and the Russian economic recession continue to have a significant impact on trading conditions within the region.

This year ITE organised a total of 66 events (2016: 74) across these territories delivering total volume sales of 64,000m2 (2016: 70,400m2), revenues of £21.7m (2016: £22.0m) and headline profits before tax of £6.5m (2016: £7.0m). Overall, on a like-for-like basis, volumes decreased by 9% over the previous year with revenues increasing by 5% and headline profit before tax increasing by 7% as dollar pricing protected revenues from currency fluctuations.

Kazakhstan is the Group’s largest office in the region selling 32,200m2 (2016: 34,400m2). The largest event in the region, Kazakhstan Oil & Gas Exhibition (KIOGE), which took place in Almaty in October 2016, was smaller than the prior edition at 3,700m2 (2016: 5,800m2). However, reflecting the improvement in the environment during the year, Mining World Central Asia held in September 2017 grew volumes by over 20% from 2,500m2 to 3,000m2.

Azerbaijan achieved volume sales of 14,200m2 (2016: 19,300m2) a decrease of 27% on the prior year on a like-for-like basis with all sectors suffering reduced volumes and like-for-like revenues down 11% on the prior year.

ITE’s Uzbekistan business is slightly more insulated from the oil price due to the nature of the local economy and it performed strongly in 2017 selling 17,600m2 (2016: 16,100m2). On a like-for-like basis volumes have increased by 23%.

Eastern & Southern Europe
 

  2017
£'m
2016
£'m
% change % change
like-for-like
Revenue 17.0 19.3 -12% 0%
Headline profit before tax 4.8 5.6 -15% -10%


The Eastern and Southern Europe region is represented by the Group’s offices in Turkey and Ukraine. Overall the region sold 134,500m2 in 2017 (2016: 172,200m2), reflecting growth in Ukraine, offset by the weaker biennial pattern and the challenging trading environment in Turkey. On a like-for-like basis this represents a decrease of 8% in volumes, flat revenues and a 10% decrease in headline profit before tax.

Overall total volumes in Turkey were down, reflecting the weaker biennial pattern, and the challenging local environment. On a like-for-like basis revenues were down 9%, better than anticipated at the start of the year. The prior year events were protected to some extent by bookings taken in advance of the coup attempt and so the current year results reflect the full year effect of the events of 2016.

Trading in Ukraine has recovered strongly. Overall volume sales were up, with a 34% increase in revenue on a like-for-like basis.

Brands

  2017
£’m
2016
£’m 
% change % change
like-for-like
Revenue 18.7 24.4 -23% -6%
Headline profit before tax 5.4 11.0 -51% -21%


The Group’s Brands business contains the results of our UK fashion events, the Africa Oil Week event and the Breakbulk portfolio of events. Overall the portfolio reports a 23% decrease in revenues and a 51% decrease in profits although this is predominantly due to event timing. On a like-for-like basis, revenues decreased by 6% and headline profits before tax decreased by 21%.

In Moda the Group owns the leading midmarket fashion event for Womenswear, Menswear, Footwear and Accessories which runs twice a year in Birmingham, UK. In London the Group operates Bubble, a niche high-end childrenswear event, Jacket Required, a designer-led menswear event, and Scoop, a designer-led womenswear event. Overall the portfolio achieved volume sales of 34,800m2 (2016: 39,600m2), a 10% like-for-like volume decline and a 7% revenue decline on the prior year with Moda continuing to see the effects of a changing market place for midmarket independent fashion retailers.

Africa Oil Week ran in October 2016 and, as expected, was adversely affected by the difficult trading conditions affecting the oil industry. There was still excellent representation from all usual participating companies, although many companies sent fewer delegates with a resulting impact on revenues of 20% compared with the 2015 event. ITE acquired the remaining 25% stake in the event in May 2017, financed through a small equity placing following the exercise of the put option granted to the previous owners. Revenues for the October 2017 event have stabilised and we believe that, with investment, this event is positioned for recovery. 

The Breakbulk portfolio overall saw a drop in volumes and revenues compared with the previous year as Breakbulk Americas ran in September 2016 and October 2017 and therefore, through timing, did not run in the 2017 financial year. However on a like-for-like basis the portfolio grew volumes by 3% and revenues by 16%.

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