HYVE GROUP PLC — Annual Report 2012

Sep 30, 2012

ITE Group plc Annual Report and Accounts 2012

ITE is one of the world's leading organisers of international trade exhibitions and conferences and specialises in organising events in growing and developing markets.

Year ended 30 September 2012 Year ended 30 September 2011 Volume sales 799,000m2 644,000m2 Revenue £172.3m £155.5m Profit before tax £40.5m £39.1m Headline pre-tax profit¹ £53.0m £51.4m Basic earnings per share 13.0p 12.8p Diluted earnings per share 12.8P 12.6P Headline diluted earnings per share2 16.9p 16.6p Dividend per share 6.5p 6.1p Net cash £13.0m £5.5m Net assets £99.8m £80.9m

Contents

Overview

• 01 Highlights
• 02 ITE at a glance
• 04 ITE's business 06 Chairman's statement

Business Review

• 08 Chief Executive's review
• 12 Delivering strategic value
• 22 Divisional trading summary 2012
• 24 Russia 26 Eastern & Southern Europe
• 28 Central Asia & Caucasus
• 30 UK & Western Europe
• 31 Rest of World
• 32 Finance Director's statement
• 37 Risks and uncertainties 38 Corporate social responsibility

Governance

• 40 Board of Directors
• 42 Directors' report
• 45 Corporate governance report
• 48 Directors' responsibilities statement
• 49 Audit committee report 51 Nomination committee report
• 52 Remuneration committee report

Financial statements

• 59 Independent Auditors' Report for the Group
• 60 Consolidated Income Statement 61 Consolidated Statement of
• Comprehensive Income 62 Consolidated Statement of Changes
• in Equity
• 64 Consolidated Statement of Financial Position
• 65 Consolidated Cash Flow Statement 66 Net Cash Reconciliation
• 67 Notes to the consolidated accounts 99 Independent Auditors' Report for
• the Company
• 100 Company Balance Sheet
• 101 Notes to the Company accounts 106 Shareholder information

1 Headline pre-tax profit is defined as profit before tax, amortisation of acquired intangibles, impairment of goodwill, profits or losses arising on disposal of Group undertakings, revaluation of financial liabilities in relation to put options over non-controlling interests, imputed interest charges on put option liabilities, gains/losses on the settlement of contingent consideration and direct costs on completed and pending acquisitions and disposals – see note 6 for details.

2 Headline diluted earnings per share is calculated using profit before amortisation of acquired intangibles, impairment of goodwill, profits or losses arising on disposal of Group undertakings, revaluation of financial liabilities in relation to put options over non-controlling interests, imputed interest charges on put option liabilities, gains/ losses on the settlement of contingent consideration and direct costs on completed and pending acquisitions and disposals – see note 10 for details.

HIGHLIGHTS 2012

Revenue £m	2012	172.3
	2011	155.5
	2010	113.5
	2009	116.7
11 + %	2008	109.8
Net cash £m	2012	13.0
	2011 5.5
	2010	23.0
	2009	23.1
136 + %	2008	29.1
Headline profit before tax £m	2012	53.0
	2011	51.4
	2010	36.6
	2009	45.8
+ %	2008	37.0
3
Net assets £m	2012	99.8
	2011	80.9
	2010	72.6
	2009	56.7
23 + %	2008	44.4

• – Record results reflect strong organic growth with a contribution from new acquisitions
• – Strong cash generation net cash of £13.0 million at year-end after investments of circa £20 million
• – Final dividend increased to 4.4p (2011: 4.2p); full year dividend of 6.5p (2011: 6.1p)
• – £95 million of revenues booked for 2013; 3%+ ahead of last year (8% after adjusting for currency)

ITE at a glance

■ Russia

ITE offices Moscow, St Petersburg, Novosibirsk, Krasnodar, Ekaterinburg

Key sectors Construction, Food, Travel, Motor, Oil & Gas

sold (000s) (2011: 344.5)

105.2 2012 revenue (£m) (2011: 105.6)

463 Number of staff (2011: 482)

■ UK & Western Europe

ITE offices London, Huddersfield, Hamburg, Utrecht

Key sectors Fashion

40.0 ^m2 sold (000s) (2011: 39.0)

9.6 2012 revenue (£m)

(2011: 9.0)

194 Number of staff (2011: 173)

Divisional review pg.30

■ Eastern & Southern Europe

ITE offices Istanbul, Antalya, Kyiv, Poznan

Key sectors Construction, Travel, Motor

■ Rest of World

ITE offices Beijing, Shanghai, Dubai, New Delhi, Chennai, Mumbai

Key sectors Construction, Oil & Gas

18.7 ^m2 sold (000s) (2011: 8) 2.1 2012 revenue (£m) (2011: 1.1)

68 Number of staff (2011: 57)

Divisional review pg.31

■ Central Asia & Caucasus

ITE offices: Almaty, Astana, Atyrau, Aktau, Baku, Tashkent, Bishkek

Key sectors Construction, Oil & Gas, Healthcare, Travel

sold (000s) (2011: 66.6)

27.0 2012 revenue (£m) (2011: 21.9)

167 Number of staff (2011: 157)

Divisional review pg.28

ITE's business

ITE is an organiser of exhibitions and conferences specialising in emerging and developing markets. ITE organises high-quality events of an international standard throughout the 15 countries in which it operates. The business is managed in five main geographic sectors: Russia, Central Asia & Caucasus, Eastern & Southern Europe, UK & Western Europe and Rest of World (see Divisional trading summary on pages 22 to 31 and the Financial highlights section on pages 1 to 2).

As an exhibition organiser, ITE hires venues at which it stages its events and markets the events to both exhibitors and visitors. Exhibitions and conferences provide an opportunity for participants from national and international companies to meet, network and transact business. The exhibition media is the best media for suppliers to display and demonstrate their products to potential buyers. This is particularly powerful in emerging and developing markets where culturally face to face meetings are the norm and where alternative media, B2B publishing and on-line marketing opportunities are less developed.

ITE's strength derives from its focus on organising B2B exhibitions and conferences, the development of strong brands in key industry sectors and the regional expertise in the markets in which it operates. ITE has been operating in these markets for over 15 years and its experience and local knowledge are unique.

ITE's principal business of organising B2B trade exhibitions accounts for 97% of the Group's revenues. Conferences account for circa 2% of the Group's revenues and other activities relating to the core exhibition business (mostly publishing) account for 1% of revenue.

ITE's sector brands are a key asset. The brands have been established through a sustained record of presenting high quality events which meet customer expectations. ITE events serve key industries including construction & interiors, oil & gas, food & drink, travel & leisure, motor & transport, fashion, medical & healthcare and IT & telecoms. ITE has an extensive office network, covering both the territories where our events are held and international sales offices in other countries. ITE is able to operate at national level where local staff are close to local industry trends and at an international level where our sales teams are in regular communication with key industry suppliers in our sectors. The Group has 28 offices across the world, each of them employing almost exclusively local staff.

Region	Offices	Staff1	Events	% of 2012 Group revenues
Russia	5	463	118	61%
Central Asia & Caucasus	7	167	93	16%
Southern & Eastern Europe	5	198	30	16%
UK & Western Europe	4	194	6	6%
Rest of World	7	68	4	1%
Total	28	1,090	251	100%

1 As at 30 September 2012.

The offices of the Group co-operate in a unique way. Each office sells its own exhibitions, but participates with equal levels of commitment in the exhibitions organised by other offices. This holistic approach has been carefully cultivated through the years and enables ITE's business to follow long-established trading patterns.

ITE's top 50 events in 2012 (by profit) categorised by region and sector

	Construction & interiors	Fashion & textiles	Food & drink	Industrial technology	Motor & transport	Oil & gas	Pharmaceutical & healthcare	Technology & telecoms	Travel & leisure	Other	Total
Moscow	●●●		●●●	●●●	●●		●		●	●●●●	17
St Petersburg	●			●				●		●	4
Novosibirsk	●										1
Krasnodar	●●		●								3
Kazakhstan						●●●	●		●	●	6
Azerbaijan	●					●		●			3
Uzbekistan						●					1
Ukraine	●	●			●				●●		5
Turkey	●●●●								●		6
India			●							●	1
UK & Western Europe		●●●									3
Total	13	4	5	4	3	5	2	2	5	7	50

● > £1 million revenue.

● < £1 million revenue.

chairman's statement

"The Group is in an excellent position to grow its business both organically and through selective acquisitions."

Group Performance

ITE has again delivered record financial results, despite 2012 being the lesser year in its biennial pattern. Revenues of £172.3 million (2011: £155.5 million) have yielded headline profits before tax of £53.0 million (2011: £51.4 million) and headline diluted earnings per share of 16.9p (2011: 16.6p). Reported pretax profit was £40.5 million (2011: £39.1 million) and fully diluted earnings per share were 12.8p (2011: 12.6p). The Group finished the year with positive net cash of £13.0 million (2011: £5.5 million), after spending £19.5 million in the year on acquisitions and deferred consideration.

This year has largely been one of internal consolidation following the large acquisitions made in 2011 as well as laying the groundwork for the expansion of its business into the Asian market. The Group has rebuilt its cash position and focused on integrating the new businesses into ITE's structure. This process is already reflected in the cost base although most of the revenue benefits will only be realised in the future. The Group has made some small bolt-on acquisitions in the year. Two event portfolios have enhanced the business in Ukraine and two smaller regional acquisitions have added scope to our business in India. The Group has announced today the acquisition of a minority stake in Asian Business Exhibition and Conferences ('ABEC'), the leading independent organiser in India.

Board and Management

On 1 February I joined the ITE Board, having already been a Non-executive Director of ITE from 2004–06. On 23 March Iain Paterson stepped down from the Board after ten years as Chairman, during which time he oversaw a period of substantial growth in the size of the Group's business, its revenues and its profits. On behalf of the Board, I would like to acknowledge the significant contribution Iain made to the development of ITE during his tenure as Chairman. There have been no other changes to the composition of the Board during the year.

The Board has taken positive steps this year to strengthen further the executive and senior management team in line with the growth of its business. ITE continues to prosper because of the efforts of its staff worldwide and I would again, on behalf of the Board like to express our thanks and appreciation to all the employees of ITE throughout our 28 offices for their significant contribution to another successful year.

ITE's Board recognises that good corporate governance is in the long‑term interests of the Group and we are conscious of our responsibilities for setting values which underpin the Group culture. As Chairman, I am mindful of my personal responsibility for leading the Board and ensuring it operates effectively. The Board effectiveness review carried out during the year confirmed the Board and its committees continue to work to achieve the desired results, and the insights gained from this process have been built into a clear action plan for the year ahead.

Dividend

The Board has a good record of maintaining a progressive dividend policy and this year the interim dividend was increased from 1.9p to 2.1p. The proposed final dividend is 4.4p, making a full dividend for the year of 6.5p (2011: 6.1p), an increase of 7%. The final dividend is proposed to be paid on 11 February 2013.

Outlook

This year, the Group has benefited from good trading conditions in most of its markets. These good results were offset by increased competitive activity in our largest market, Moscow. The effects of this new competition have now been absorbed into our results and the trading conditions in our principal markets continue to be buoyant. At 30 November revenues booked for the 2013 financial year are £95 million, in line with the Board's expectations and representing circa 53% of market expectations for 2013 revenues. On a like-for-like basis revenues are circa 4% ahead of last year, despite movements in exchange rates (principally in Euro to Sterling) which have reduced average Sterling yields by circa 4% against this time last year.

The Group's portfolio of events are performing well and operating in markets where growth prospects are good. Strong cash flow and an ungeared balance sheet places the Group in an excellent position to continue with its strategy of growing its business both organically and through selective acquisitions. The Board is focused on the execution of this strategy, and remains confident in ITE's future prospects.

Marco Sodi Non‑executive Chairman 3 December 2012

chief executive's review

"A good financial performance, driven by growth in the core portfolio and the successful integration of recent acquisitions."

The Group's performance this year

ITE has delivered a good financial performance in its lesser biennial year which reflects a good trading performance in most of its markets together with a first time contribution from acquisitions, but offset by an increase in the cost base of Mosbuild which relocated to a new venue and faced a new competitive threat. ITE has made a number of smaller bolt-on acquisitions in the year in Ukraine and India, but the main focus of management has been to integrate properly and consolidate the large acquisitions which the Group made during 2011.

Revenues for the year of £172 million represent an 11% increase over last year, and volume sales of 799,000m2 represent growth of 24% over last year. These results reflect growth in the core portfolio and recent acquisitions. On a like-for-like basis revenue growth of 3% was earned on volume sales growth of 2%. Trading conditions in most of our markets were consistently strong and most of our markets delivered revenue growth figures of more than 10%, although Moscow and the UK were exceptions to this.

The major impact on our results this year came from ITE's premiere construction event Mosbuild which represents one third of our exhibition business in Moscow. Following a decision by its host venue to launch its own competitive event in the construction sector, ITE had in 2011 made the decision to relocate Mosbuild to another venue which offered more secure terms for its future. The results this year reflect the financial impact of this upheaval but also underpin the strength and resilience of this event. Mosbuild in underlying terms stayed broadly the same size – despite facing the dual challenges of relocation and new competition. Exhibition sales achieved were 66,000m2 compared to 77,600m2 in 2011, the change mostly reflecting a biennial pattern within one of its sectors. However the cost base of the show increased by circa

£3 million in the new venue, which in addition to the biennial effect on the revenues negatively affected ITE's 2012 profits by circa £4.5 million. This one-off step up in costs has now been absorbed and sales for the 2013 event are, to date, progressing in line with expectations.

Excluding Mosbuild, the like-for-like revenues from the Russian exhibition business grew by 4% this year. Trading conditions in the Central Asia markets were strong and supported a 21% improvement in like-for-like revenues. In Southern and Eastern Europe, good trading conditions helped the region to deliver 6% like-for-like revenue growth, which together with a strong first time contribution from Turkeybuild and the new Ukrainian acquisitions helped the region to its best ever result. Our UK business MODA also had a good year with growth from its minority stakes in niche fashion businesses and a solid performance from its mainstream fashion event.

The main factors affecting Group profitability this year are summarised in the profit bridge opposite.

Development of the business

ITE has focused this year on properly integrating the new businesses it acquired last year, as well as laying the groundwork for developing a business platform in Asia. Two of the larger acquisitions in 2011 were in Russia (MVK and Krasnodar). The Krasnodar business made a full year contribution with revenues of £8.4 million and a profit contribution of £2.4 million, both better than our expectations at time of acquisition. The MVK business in Moscow performed well in delivering revenues this year of £14.8 million and a contribution of £5.2 million, despite the competitive environment and the relocation of some of its events. Turkeybuild, also acquired last year, made its first contribution to ITE's results and delivered its best ever result with revenues of £7.3 million and a contribution of £3.2 million.

The Russian management team has been consolidated into a regional management structure. The financial and operating systems of the four businesses are now managed on a common platform and the various show identities and brands are being combined. We have identified a number of good opportunities to cross launch events from one region to another and to cross sell between events. Likewise in Turkey there has been a change in management structure to absorb the newly acquired Turkeybuild.

We made some small complementary acquisitions this year which have helped to build the profile of ITE's business in Ukraine, India and the UK. In December 2011 ITE completed the acquisition of the Autoexpo portfolio of events in Ukraine, which brought a number of complementary events (winter tourism, logistics) into the portfolio, but whose principal asset is the dominant motor show taking place in Ukraine. Later in the year we acquired two events in the beauty sector (Beautex), which is a new sector for ITE, but of considerable growth potential in other regions where ITE operates. In India we made two small acquisitions in the year – one a portfolio of engineering events based in Mumbai and one of construction related events in Chennai. India's exhibition business is currently regional with no single large exhibition facility, and the route to expansion is through regional cloning. Having a regional capability now provides the Group with a platform for running events in Mumbai and Chennai. In the UK, MODA increased the scope of its London based fashion business through the acquisition of 'Jacket Required', a fast growing niche menswear event.

ITE's priority in Russia and CIS over the next year is to continue the organic growth initiatives started this year. The Group will also continue to look for opportunities to expand the business model, both in-market and by building a coherent exhibition business in Asia.

chief executive's review continued

Having done much of the groundwork this year we are well positioned to make good progress next year.

Announced today was the acquisition of a 28.3% minority stake in ABEC, the largest independent organiser in India. ITE plans to co-operate with this new partner and become a majority owner within the next three years. One of the exciting aspects of this partnership is that ITE now has ownership of the premier construction events in Russia, Turkey and India, three of the fastest growing emerging markets.

The international exhibition business

The global exhibition market was estimated to be worth circa \$25 billion in 2011. The following table sets out the distribution of the world's exhibition business and shows that almost half by value is in the USA, and circa three-quarters is in developed markets. There is a broad correlation between the amount of exhibition space in a country and the size of a country's exhibition industry.

The emerging and developing market exhibition business is small when compared to the developed world, but faster growing. Russia, Turkey and the CIS countries together account for just over \$1 billion (4%) of the world's exhibition business and the Asian markets (China, India and South East Asia) account for circa 10%.

Projected future growth rates for the exhibition industry are set out opposite.

ITE is the eighth largest organiser in the world by revenue, and the third largest in emerging markets. ITE is the largest exhibition organiser in Russia with an estimated market share of over 20%. ITE is in a stronger position in most of its Central Asian businesses with a leading market position and status as the dominant international exhibition organiser. In Turkey ITE has a strong market position (8% of the market) though its business is more locally based and there are a number of other international organisers

competing in different sectors. All of these markets are expected to grow in the future at above average rates for the industry and a large part of ITE's strategy is based around ensuring we continue to be market leaders in these markets.

ITE aims to apply its free cash flow from its exhibition businesses in expanding its business model to new markets, where there is good potential for growth in the future. The current focus is on developing a business infrastructure in India, South East Asia and China to ensure our exhibition portfolio can participate in the expected growth in these regions.

ITE's objectives and strategy

developing markets.

• ITE's business objectives are to: – Create sustainable growth in
• headline earnings per share – Create and maintain sustainable positions of market leadership in the exhibition business in emerging and

ITE's strategic priorities for achieving these objectives are:

• i. to strengthen and develop existing positions of market leadership
• ii. to expand the business model into new sectors and geographies where there is potential to develop strong market positions
• iii. to grow and improve its portfolio of international exhibition brands
• iv. to invest in the development of management talent in ITE.
• v. ITE's performance against its strategic objectives is set out below:

(i) To strengthen and develop its existing positions of market leadership.

ITE's positions of market leadership are founded on its ability to generate international sales, its recognised brands, its local office infrastructure and its longstanding relationships with venues.

International sales strength

ITE's ability to generate international sales differentiates it from most of its local competition in Russia and the related CIS markets. Through its subsidiary sales offices the Group has established a loyal customer base and a specialisation in promoting sales into ITE's Russian and CIS exhibitions. In 2012 the total net metres sold by the Group's international sales offices increased by 18% to 115,500m2. This represents circa 23% of the Group's 2012 revenues, the same proportion as achieved in 2011 reflecting the acquisition of new businesses which are mostly weighted towards local sales. The Group has invested in building-up its international sales presence this year, opening a new office in Malaysia to target potential customers from South East Asia. Approximately 9% of revenues were sold by the Group's London office, 4% by its German office, 3% by its Chinese office and 3% by its Turkish office.

ITE's international brands

ITE has established strong brand identity in certain exhibition sectors. In particular, the Build brand in construction, the Oil & Gas events brand, the ITE Travel exhibition and World Food brands all have strong reputations as leading events in the Russian and CIS markets earned through more than 15 years of sustained good performance. The Group is working to increase recognition for these brands in other emerging markets. There are also a number of new and developing local brands in security, transport, packaging, printing and mining events. The Group is working to consolidate and establish these brands more visibly in the international exhibition world.

Building ITE's local office infrastructure

ITE's brands have built their reputation through sustained delivery of successful exhibitions to customers. The foundation of this is in ITE's local offices which, like its exhibitions and brands, have been in place for nearly 20 years and today employ over 800 staff who organise the details of staging an exhibition. Critically they

Future exhibition organising market growth by country and revenue type (CAGR 2011–16)

own and manage the database of visitors necessary for making an exhibition successful for ITE's customers. ITE's local offices are a competitive advantage over other international organisers and a barrier to entry for new organisers wishing to run events in these markets. ITE continues to strengthen its local office presence through investment in infrastructure and training its staff. There is a high level of equity ownership in the Group with more than 51% of staff participating in equity schemes of some description.

Source: Various, AMR estimates

Maintaining venue relationships

ITE has established long-standing relationships with the venues that host its exhibitions. Historically ITE has supported the development of venue facilities which in turn has helped the Group's exhibitions to prosper. Through this ITE has established rights to run its main exhibition themes in its chosen venues at the time of its choice. ITE has continued to work on maintaining and improving the venue relationships that underpin its business. Most of ITE's major events have agreements which provide for venue facilities for at least three years ahead. This year ITE has agreed outline terms for holding its shows in the new St Petersburg venue, which is due to be completed by 2014.

(ii) To expand the business model into new sectors and geographies where there is potential to develop strong market positions.

In existing markets this strategy means targeting new sectors or regions in which to acquire or develop businesses where there is potential for the participation of international exhibitors. In new markets, ITE is targeting the development of exhibition businesses where there is clear opportunity for strong future growth.

This year the Group has expanded the industry sectors in its Ukrainian business. Through its acquisitions of Autoexpo and Beautex the Ukrainian business has gained exposure to the automotive and beauty/cosmetics sectors. The beauty sector is new to ITE, and one we hope to be able to replicate into other markets in the near future. The Group aims to increase its involvement in a broader range of sectors in India, and made two small acquisitions this year, one in the industrial machinery sector and one in the construction sector.

(iii) To grow and improve its portfolio of international brands.

The Group's management has been working to improve the strength of ITE's existing international brands and to improve international recognition of its local brands. As part of this, some industry vertical groupings have been established to ensure consistency of presentation and message across the Group. Developing the international recognition and strength of its brands improves the Group's ability to successfully 'clone' its events into new geographies.

(iv) To invest in the development of management talent in ITE.

The Group employs a management structure that encourages creativity, promotes responsibility and facilitates the change that is required to maintain and strengthen ITE's position as a market leader. This structure relies on experienced and skilled managers who are either nurtured through the ITE system or recruited for their ability to contribute towards the development of the business.

Over two decades, ITE has built a reputation for producing effective and respected trade events in growing and developing markets. This has been achieved by setting standards that exceed customer expectations as well as the standards delivered by rival organisers.

As competition naturally intensifies and expectations grow, ITE has to meet the challenge of constant improvement. The Company recognises that this doesn't happen by chance – it happens because of the skills, qualities and commitment of the Group's staff.

We have made some good progress in developing the strength and depth of the management team in the year as well as improving the communication between the different offices. We have further developed our Group intranet as well as opening up communication by functional management i.e. connecting staff lines across the different offices such as construction/marketing/IT. We have started on a rolling programme of internal senior management and functional conferences, and launched a series of leadership training courses to further develop our internal management resource.

Russell Taylor Chief Executive Officer 3 December 2012

Delivering strategic value

We are committed to maximising shareholder returns through a mixture of increasing dividends and reinvestment in the business

Key Performance Indicators

The key performance indicators that ITE uses to measure progress against its objectives and the performance this year are set out below:

To increase revenues from existing exhibition portfolio

Sterling revenues from existing products have increased by 3% in the year under review. This reflects a good trading performance in most of its markets together with a first time contribution from acquisitions, offset by increased competition in Moscow.

To increase the annually recurring volume base of ITE's exhibition business

The annually recurring volume base of the exhibition business increased by 28% in 2012 from 587,000m2 to 751,000m2. The net increase in volume sales is comprised of a 2% increase in like-for-like sales of 14,000m2, and an additional 150,000m2 from the newly acquired events. Those new events were spread across a number of the Group's regions in line with the Group's objective of geographic diversification:

Moscow	39,200m2
Krasnodar	35,500m2
Turkey	43,500m2
Ukraine	27,800m2
India	2,100m2
Kazakhstan	1,300m2
UK	600m2

To make incremental bolt on acquisitions in support of the Group's objectives

The Group acquired two Ukrainian portfolios which complement the existing exhibitions in Ukraine.

The Group also acquired two portfolios in India which provide strong complementary regional offices in Mumbai and Chennai.

Secure forward venue rights for significant exhibitions Of ITE's top ten exhibitions, one has secured rights for the next five years, six for two years, one for two years and two for one year. The Group's management is engaged in an ongoing process of agreeing venue terms to ensure this objective is met. These ten exhibitions represent 57% of the Group's 2012 gross profit.

Build

Strategic priorities

Build and strengthen on existing market leadership

Achievements

• – Acquisition of two Ukranian portfolios, two Indian businesses, one in Kazakhstan and one in the UK for total consideration of £16 million
• – Expanded international sales office network with opening of office in Malaysia

Leverage

Strategic priorities

Leverage our business model into new markets and geographies

Achievements

• – £1.6 million from new launches, including Aquatherm Tashkent
• – Successful launch of Power India and Power Turkey conferences
• – New launch committee formed to source and encourage the development of new events

Strategic priorities

Grow and develop our portfolio of international brands

Achievements

• – Investment in digital support
• – Successful launch of MyMosbuild website
• – Brand development project under way to support vertical management of industry portfolios

Grow

Strategic priorities

Invest in the development of our management

Achievements

• – Development of internal leadership and mentoring programme
• – Establishment of first ITE management conference
• – Deployment of ITE intranet
• – Appointment of internal communications manager

Build and strengthen our existing market leadership

ITE's strategy targets new sectors and regions within its existing markets where there is potential to increase the participation of international exhibitors.

Group revenue from international sales offices

St Petersburg Construction conference

Two acquisitions in Ukraine brought the dominant motor show in Ukraine and two Beauty shows into the Group along with a number of other complementary events into the portfolio. The Beauty sector offers good growth potential not only in Ukraine but in other regions of the Group.

Two acquisitions in India provide regional offices in Chennai and Mumbai. As India's exhibition industry is based on regional geo-cloning of events, these regional offices provide a platform for future growth.

The Group opened a new international sales office in Malaysia to target potential customers from South East Asia. This helped increase the total net metres sold by the Group's international sales offices by 18% to 115,500m2.

To improve existing events, the Group is bringing together expertise in key industries through a vertical management structure to complement the existing geographical structure. During the year the Construction vertical developed a number of new initiatives by working together, including at a conference in St Petersburg, to strengthen the existing events and develop new launches initiatives.

) verview

Leverage our business model into new markets and geographies

ITE's business is about creating the opportunities for buyers and sellers of products to meet in a face-toface environment. Over the past 20 years the Group has built its relationships with all parties involved in establishing a successful exhibition such as exhibitors, visitors, venues, staff and local businesses.

All parties trust ITE to deliver events of the highest quality – this trust affords the Company a unique opportunity to leverage those relationships and continue to grow its business in new markets and geographies.

The expansion of the Group over the past few years has opened up opportunities for the Group's exhibitors in several new sectors, including furniture manufacturing, printing and packaging in new regions of the world, including Southern Russia, Siberia and India. The ability to take existing brands to those new territories, such as Build and Food to India, is a compelling part of the ongoing relationship ITE has with its customers.

Grow and develop our portfolio of international brands

Key brands acquired in Ukraine, India and the UK

In the last two decades, ITE has developed a number of successful brands that are renowned for providing effective marketplaces for business. ITE has established leading brands in a number of key sectors, in particular the Build brand in construction, but the Group also leads in Oil & Gas, Travel and Food.

The Group is continuing to establish and enhance our portfolio of brands through their extension into new geographies. These include Aquatherm, which the Group is now running in Moscow, Ukraine, Kazakhstan, Azerbaijan and Uzbekistan.

Product enhancement is designed to accelerate the speed at which ITE's events develop by focusing on delivering an improved customer experience to help maintain market leading status.

ITE is embarking on a significant review of its brand structures and communications across its largest portfolios. The project will build on the success of ITE's events and will strengthen brand recognition and provide greater clarity through more consistent visual identities, messaging and tone of voice. More coherent brand architecture will also provide ITE with a quicker and more agile system to assist with new launches and the integration of acquired events.

The project is a cornerstone of ITE's strategy to strengthen its core vertical business whilst retaining the robust international network and regional focus on its operations.

Invest in the development of our management

of employees in equity schemes

Istanbul Management conference

ITE is committed to investing in staff development throughout the Group and in particular, the management team that supports growing events and the continued expansion of the business.

Job satisfaction and staff retention have always been strengths associated with ITE. The Company encourages staff to seize career development opportunities. Staff can switch job functions if they possess the necessary skills and drive to succeed in another role. Others move offices, relocating to a new city or country in order to progress. There are no fewer rewards for those who chose to stick with their profession of choice, because working for ITE provides the variety of products, markets and projects for people to constantly develop and test their talents.

The management support structure has been strengthened in recent years with the introduction of a Senior Management Board ('SMB'). The SMB consists of a small group of senior managers who represent the business by territory and job function. They meet quarterly and discuss a range of strategic and operational issues.

In late 2011, ITE appointed a Group HR Director in order to continue improving the programme of management and staff training and development across all parts of the Company. This has resulted in a number of new initiatives including a more formal succession planning, creation of a leadership and mentoring programme to nurture talent beneath the SMB, and the first ever ITE management conference. The conference took place in Istanbul in June and brought together 75 senior managers within ITE. It was aimed at improving communication across the Group and fostering a deeper understanding of the strategy, culture and values of ITE. It spurred a number of new initiatives and will be followed in 2013 by a series of similar crossregional conferences run along functional lines for sales & marketing and finance.

New communication tools have been employed so that valuable information and ideas can be shared across the Group and more specialist roles have been created to develop greater levels of expertise in key areas of the business such as branding, database management, business development and digital.

ITE has talented staff and the Company will continue to invest in the development of its workforce by creating the right environment, the right opportunities and the right level of support for that talent to flourish.

divisional trading summary 2012

	Revenue			%
	2012 £000	2011 £000	% change	change like‑for-like1
Russia	105,163	105,650	0%	-2%
Central Asia & Caucasus	27,030	21,853	+24%	+21%
Eastern & Southern Europe	28,417	17,940	+58%	+6%
UK & Western Europe	9,562	8,950	+7%	+6%
Rest of World	2,140	1,063	+101%	-32%
Total	172,312	155,456	+11%	+3%

1 Measures the change over the previous year after excluding biennial events and acquired events impacting the results for the first time.

ITE's results this year reflect good economic growth in the Group's markets and a first time contribution from newly acquired businesses, partially offset by the effects of the Group's weaker biennial pattern and the effects of increased costs and competition on the Group's leading event. In total the Group saw volume sales increase by 24% to 799,000m2 and revenues by 11% to £172.3 million. On a like-for-like basis, volume sales grew by 2% and revenues grew by 3%.

In 2012 the Group ran 251 events (2011: 211). The increase in the number of events is a mix of acquisitions and new launches, together with the cancellation of some marginal events. A detailed analysis of volumes, revenues and gross profits from the Group's exhibition and conference activities is set out below. Average yields have reduced to £224 per m² primarily due to lower yielding events included for the first time; excluding those events the average yield would be £243 per m2.

		Square			Average
		metres sold	Revenue	Gross profit	yield
		(000)	£m	£m	per m2
2011	All events1	644	154	75
	Non-annual	(57)	(12)	(6)
2011	Annually recurring	587	142	69	242
	Acquisitions	150	22	9
	Net Growth	14	4	(1)
2012	Annually recurring	751	168	77	224
	Non-annual	48	4	1
2012	All events	799	172	78

1 Excluding publishing.

russia

15% growth in regional portfolio revenue

In Russia ITE operates through four principal offices, Moscow, St Petersburg, Novosibirsk and Krasnodar together with a small office in Ekaterinburg established in 2012. During the year ITE held 118 events in Russia (2011: 104), with total volume sales of 391,800m2 (2011: 344,500m2). Revenues of £105 million were fractionally lower than the previous year, reflecting the weaker biennial year, a small decline in the Moscow business, good organic growth from in the regional portfolios (which grew by an average of 15%) and acquisitions impacting for the first time this year. On a like-for-like basis volume sales and revenues in Russia were down 2% on the prior year.

The Russian economy continues to grow at a good pace, with GDP growth of around 4% in 2012 and similar levels forecast for 2013. This backdrop of economic growth underpinned by relatively stable commodity prices, most notably oil, is providing the environment for continued good growth in ITE's exhibitions.

Moscow is ITE's largest office accounting for around 48% of Group revenue. The results this year reflect the weaker biennial pattern in Moscow and the effect of competitive launches against two of our leading Moscow events, Mosbuild and Euroexpomebel which together offset the good growth in the office's other events. Overall volume sales for the year were 251,200m2 (2011: 248,800m2) with new events from last year's MVK acquisition helping to offset the absence of the biennial Moscow International Oil & Gas Exhibition ('MIOGE').

The Moscow business had a strong first half with 14% like-for-like growth, led by Aquatherm Moscow which again delivered double digit growth. There was a small decline in volumes at the Moscow International Travel and Tourism exhibition with volume sales of 20,000m2 (2011: 21,000m2) as exhibitors from Southern European travel destinations continue to suffer austerity cutbacks. The second half of the year again saw some excellent results and strong growth from a number of ITE's leading events although overall profitability was affected by Mosbuild. The logistics event TransRussia lifted volume sales by 16% to 10,100m2, Moscow International Security & Protection also grew volume sales by 16% to 10,000m2, and World Food Moscow also continued to grow well with a 7% increase in volume sales to 24,400m2. All three of these events are constituents of the Group's top 15 events by gross profit and reached record sizes this year. As expected Mosbuild proved very resilient to competition, delivering record visitor numbers, and volume sales of 66,100m2 representing a decline of just over 3,000m2 (after adjusting for the biennial pattern in the Windows sector).

In St Petersburg, ITE made further good progress, building on the improved trading conditions experienced in 2011. During the year ITE operated 17 events from this office selling 35,000m2 (2011: 30,500m2) a 15% increase which was matched by a similar increase in revenues. Growth was good across all sectors, but most importantly for this construction-dominated portfolio, Interstroyexpo, the region's leading event, improved its volume sales by 14% to 9,800m2. The St Petersburg business has not yet recovered its full 2008 market size, but further recovery is expected albeit at a slower pace than this year. Construction has now begun on a new venue for the city with completion due by 2014 and the Group has recently signed a protocol agreement covering its current events in the new venue.

In Novosibirsk it was an important year for Sibfair, ITE's operation in Siberia, with the opening of a new 14,000m2 state of the art exhibition centre located close to the airport. ITE is the anchor tenant for this venue and the international quality space it offers is already providing a platform for growth in the Group's business in this region, although due to the increased cost base there is a lag on profitability. During 2012 the region held 30 events (2011: 34), removing a number of smaller less profitable events which were not suited to the new venue. Overall volume sales were 42,700m2 (2011: 37,800m2), an improvement of 13% over the previous year as exhibitors responded to the improved facilities and local revenues improved by 14% to nearly £7 million.

In Krasnodar this was the first full year of ownership for ITE's Krasnodar business which had been acquired in March 2011. Krasnodar is in the south west of Russia, it will be one of the host cities for the 2018 FIFA World Cup and is located just two hours from Sochi where the 2014 Winter Olympics will take place. The region, which is the centre of the Russian agricultural industry, is one of the most prosperous outside Moscow and continues to attract increasing numbers of international manufacturers. The exhibition portfolio covers a broad range of sectors, the largest events being in the agriculture and construction sectors. In total the region contributed volume sales of over 68,000m2 and generated over £8 million in revenues this year, a growth of 15% on the equivalent prior period.

eastern & southern europe

Two acquisitions completed in the year, adding over 30,000m²

The Eastern and Southern Europe region is represented by the Group's offices in Turkey and Ukraine. Overall the region sold 268,300m2 in 2012 (2011: 185,900m2). On a like-for-like basis sales grew by 5% in volumes and 6% in revenues. In Ukraine, which is now experiencing better economic conditions, the Group invested over £10 million in two separate acquisitions reflecting the Group's ongoing confidence in the future of the region. The two acquisitions bring new sectors for ITE in the region, adding over 30,000m2 in volume sales and over £3 million in annual revenues to the Group.

Both acquisitions illustrate how ITE's market-leading position and in-depth knowledge of the industry in each of the territories we operate in affords us good opportunities to expand our portfolio at good prices.

Ukraine

Despite the well documented economic and political difficulties, Ukraine remains an attractive market for ITE and one in which we will continue to expand both organically and by acquisition. The successful co-hosting of the UEFA European football championships this summer was great exposure for a country with a population in excess of 45 million and forecast GDP growth of 4% per annum in the short to medium term. It has significant natural resources, notably iron ore and coal, plus recent findings of shale gas reserves which provide opportunities for sustained growth that will impact positively on ITE's operations in this country.

In November 2011 the Group announced the acquisition of the Autoexpo portfolio of events, the largest of which is the principal automotive event in the Ukrainian market taking place each May. In April 2012, the Group announced the acquisition of Beautex which runs two events in the Beauty sector. Volume sales in Ukraine nearly doubled to 61,400m2 (2011: 33,600m2), helped by the Autoexpo and Beautex acquisitions.

Turkey

The Turkish economy is continuing to grow and the country is now established in the second tier of emerging market economies. These economies are seen as offering potential for above average economic growth, and are characterised by a growing aspirational middle class population which is expected to drive consumer demand. The market continues to be characterised by two types of exhibitions, those that are dominated by local trade associations which tend to be low cost/low margin events, and those that attract international exhibitors which tend to be higher yielding/ higher margin events. ITE's portfolio of events has until recently been biased toward the domestic market. The acquisition of EMITT (East Mediterranean International Travel & Tourism event) in 2009 and of Turkeybuild in 2011 has changed the composition of the Turkish business. In the medium term the Group aims to raise the margins in its more domestic events by increasing the level of international participation. This process has begun with the development of the biennial Ankomak (construction machinery) event, which this year produced significantly increased margins and profits.

During 2012, the portfolio continued to perform well with volume sales of 206,700m2 (2011: 152,400m2) which includes a first time contribution from Turkeybuild together with a change in the mix of biennial events. Turkeybuild, the pre-eminent construction event in Turkey, took place in early May for the first time under the Group's ownership and delivered its largest ever event with volume sales of 36,100m2. The event enjoys strong demand for additional space from its exhibitors, which at present can't be satisfied by current venue arrangements. The Group is working on initiatives to satisfy this demand through the development and expansion of the Turkeybuild offering. The Group's leading regional travel event EMITT achieved record volumes for a 4th successive year, illustrating the continued growth available in this sector in the region.

central asia & caucasus

21% growth in like-for-like revenues

ITE's principal offices in Central Asia are in Kazakhstan, Azerbaijan and Uzbekistan. This year ITE organised a total of 93 events across these territories delivering volume sales of 80,000m2, an increase of 19% over the previous year. Revenues of £27 million represented an increase of 28% over the previous year.

All of the economies in this region are dependent on Oil and Gas for their overseas earnings and economic wealth. The consistent \$100+ barrel price of oil has helped support economic confidence within these economies feeding through to good levels of economic growth, which has been reflected in the growth of ITE's business in the region this year.

Kazakhstan

Kazakhstan continued to grow strongly in 2012, delivering like-for-like volume growth of 13% and revenue growth of 9%. The capital Astana has recently been chosen to hold the World Expo in 2017 which will be a significant international event and an opportunity to showcase the country and bring significant new exhibition facilities to the city.

The region is dominated by the Oil & Gas sector, which accounts for over 40% of regional revenue. The largest event in the region is the Oil & Gas Exhibition (KIOGE) which took place in Almaty in October 2011. The event has been expanded this year to include the Kazenergy conference in Astana and this has allowed the Group to coordinate the development of a broader Kazakhstan Oil and Gas week. The combined event produced sales of 8,500m2 an increase of 9% on the previous year and combined conference revenues were increased by over 30%.

Other important sectors are construction which has remained relatively subdued since the property crash of 2008, but grew revenues by 5% in 2012, and the fast growing Food and Health & Pharmaceutical sectors which both grew revenues by around 30%.

Azerbaijan

The region has continued to build on the opportunity afforded by the development of a new venue in 2010 and the country's continued economic expansion, and this year the region achieved volume sales of over 22,400m2 (2011: 18,600m2) a 20% increase on the prior year. ITE is benefiting from being the recognised industry leader in the country and has organised a number of third party conferences resulting in an overall revenue increase of over 40% during the year.

Uzbekistan

ITE's Uzbekistan business showed strong growth in 2012 selling over 13,600m2 (2011: 10,100m2) in the year aided in part by a number of small events moving date lines. Excluding these timing differences regional revenue grew by 15%, led by events in the Fashion textiles and Mining sectors.

uk & western europe

Continued gains in market share in UK fashion sector

Despite continued static economic conditions in the UK, the Group's fashion business continued to perform well and continues to execute its strategy of broadening its sector offering whilst maintaining a lead in the mid-market sector. The Group now contains a number of brands that serve several sectors of the UK fashion industry. MODA, which is the leading midmarket fashion event for Womenswear, Menswear, Footwear and Lingerie, runs twice a year in Birmingham generating volumes sales in excess of 35,000m2 annually. In London the Group operates Bubble, a niche high-end Childrenswear event and it also owns a 40% stake in Scoop, a designer lead Womenswear event. In July 2012 the Group expanded into the designer led Menswear sector with the purchase of 100% of the London based event, Jacket Required. Overall, these events grew by 3% in volumes and 8% in revenues as the business continued to gain market share.

Overview Business Review Governance Financial statements

rest of world

Groundwork laid for expansion in India and South East Asia

The Group's operations in this Division are in India, which has potential for significant organic growth as its exhibition industry is currently sub-size for its economy. The Group continued to expand its presence in this market with two small regional acquisitions in May 2012. In Mumbai the Group purchased a portfolio of engineering events, and in Chennai the Group purchased two construction events. These new offices complement its existing Delhi operation. This year saw the return of the Group's leading event Paperex, which serves the domestic paper mill industry. The event grew by nearly 30% in comparison to its 2010 edition, demonstrating the potential for growth in the region. These new businesses allied with the existing base provide the Group with opportunities to expand its regional events offering whilst adding additional operational capacity.

finance director's statement

"Excellent revenue growth combined with strong cash generation."

Revenue and gross profit

Revenue for the year was £172.3 million (2011: £155.5 million) and gross profit for the year was £77.7 million (2011: £74.9 million), a reduction in gross margin by 3% to 45.1% (2011: 48.1%). The main factors affecting gross margin are summarised in the gross margin bridge opposite.

Administrative expenses across the Group increased to £39.8 million from £35.2 million in the previous year. Administrative expenses include significant non-cash items, including an amortisation charge of £13.5 million on acquired intangibles (2011: £10.7 million) reflecting the impact of acquisitions made during the year together with a full-year's charge for acquisitions made during 2011, a charge for share-based payments of £2.1 million (2011: £1.7 million) and a foreign exchange gain of £0.3 million arising on the translation of foreign currency assets (2011: a loss of £0.2 million).

Excluding these non-cash items, administrative expenses increased by £2.1 million to £24.5 million (2011: £22.4 million), with £1.7 million being overheads relating to the full year impact of acquisitions made in the prior year and acquisitions made in 2012. Overall, Group administrative expenses excluding non-cash items and transaction related costs represented 14% of revenue (2011: 14%).

Operating profit was £39.0 million against a prior year profit of £40.0 million, resulting in net operating margins of 23% (2011: 26%) for the year. The result in both years is impacted by the significant increase in amortisation charges. After adjusting for amortisation on acquired intangibles operating profit for this year is £52.5 million (2011: £50.7 million), yielding an operating margin of 30.5% (2011: 32.6%)

Headline pre-tax profit for the year was £53.0 million (2011: £51.4 million).

Reconciliation of headline pre-tax profit to profit on ordinary activities before taxation

	2012 £000	2011 £000
Profit on ordinary activities before taxation	40,474	39,094
Amortisation of acquired intangibles	13,508	10,717
Loss on exercise of Ekin Fuar put option	93	269
Gain on revaluation of put option liabilities	(1,641)	–
Unwind of discount on put option liabilities	460	–
Profit on sale of investments	(78)	–
Gain on settlement of contingent consideration	(453)	(119)
Loss on settlement of contingent consideration	–	104
Transaction costs (completed and pending)	640	1,180
Impairment of goodwill	–	130
Headline pre-tax profit	53,003	51,375

Other operating income

£0.4 million (2011: £0.3 million) Other operating income represents rental income earned from subletting surplus office space, principally at ITE's London office.

Investment revenue

£3.2 million (2011: £0.6 million) Investment revenue came from interest on bank deposits which increased to £1.0 million this year (2011: £0.4 million), gains on the revaluation of put options on acquisitions made during 2011 of £1.6 million (2011: nil) and gains on the settlement of contingent consideration of £0.5 million (2011: £0.1 million).

Finance costs

£1.7 million (2011: £1.5 million) Finance costs represent the interest cost of the Group's borrowings in Sterling, Euro and US Dollar (£0.7 million), bank charges (£0.4 million) together with an imputed interest charge arising on the discounting of the Group's put option liabilities of £0.5 million.

The Group enters into currency borrowing arrangements as part of its currency hedging activity and at 30 September 2012 the Group had currency borrowings in the form of overdrafts of £13.3 million, and US\$3.3 million, equivalent to a total of £15.4 million (2011: £13.9 million). In addition, the Group had term loans drawn in

Euros totalling £13.3 million (2011: £14.5 million).

Tax charge

The tax charge of £7.9 million represents 20% of profit before tax (2011: 21%). The Group continues to focus on tax efficiency across the Group, with the reduction in the tax rate this year resulting from further effects of the lowering of underlying corporation tax rates within the main operating economies of the Group, together with efficiencies within the Group structure. The lower levels of underlying corporation tax, if sustained, will continue to benefit the Group's tax rate in the future.

Earnings per share

Basic earnings per share increased by 2% to 13.0p (2011: 12.8p). Diluted earnings per share also increased by 2% to 12.8p (2011: 12.6p).

The Group achieved headline diluted earnings per share of 16.9p (2011: 16.6p). Headline diluted earnings per share are based upon profit for the financial year attributable to equity holders of the parent, before amortisation and impairment of acquired intangible assets and goodwill, any profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to put options over non‑controlling interests, imputed

finance director's statement continued

interest charges on discounted put option liabilities and transaction costs relating to completed and pending acquisitions and disposals.

Dividends

The Group has recommended a final dividend of 4.4p per share for 2012, to bring the total dividend for the year to 6.5p per share (2011: 6.1p).

Return to shareholders

ITE is committed to maximising shareholder value through a long-term progressive dividend policy, set against a principle of maintaining at least two times cover across the biennial cycle, together with the reinvestment of profits into expanding the business. Since 2007 the company has increased the dividend by 44% from 4.5p per share to a record level of 6.5p.

Cash flow

Cash generated from operations in the year was £62.1 million, representing 117% of headline profits (2011: £65.3 million, 127%). The principal applications of cash were £19.6 million applied to acquisitions (2011: £44.5 million); £6.2 million applied to new venue loans and advances (2011: £6.9 million); £11.6 million was paid in tax (2011: £11.6 million); and £15.2 million was distributed as dividends to the Group's shareholders (2011: £14.1 million). The increase in net cash balances over the year was £7.5 million, with the Group holding £13.0 million in net cash at 30 September 2012 (2011: £5.5 million).

Acquisitions

On 2 December 2011, ITE acquired the assets of LLC Autoexpo ('Autoexpo') for £4.5 million in cash. During the financial year this portfolio of Ukrainian exhibitions contributed revenue of £1.0 million and £0.2 million of profit before interest charges to the Group's headline results.

On 3 April 2012, ITE acquired 100% of the issued share capital of Beautex Co LLC ('Beautex') for £7.1 million of which £5.0 million was satisfied in cash on completion and a deferred

consideration payment of £1.3 million was paid in June. Further deferred consideration of £0.3 million is payable in equal tranches, in June 2013 and June 2014. During the financial year this group of exhibitions contributed revenue of £2.0 million and £0.9 million of profit before interest charges to the Group's headline results.

The Group also completed four smaller acquisitions (two in India, one in

Kazakhstan and one in the UK) for total consideration of £4.1 million, of which £0.6 million is contingent and deferred, with £0.3 million expected to be paid in July 2013 and £0.3 million expected to be paid in July 2014.

During the financial year this group of exhibitions contributed revenue of £1.8 million and £0.3 million of profit before interest charges to the Group's headline results.

Balance Sheet

The Group's consolidated balance sheet at 30 September 2012 is summarised in the table below:

Total as at 30 September 2011	225.1	(144.2)	80.9
Total as at 30 September 2012	237.4	(137.6)	99.8
Other non-current assets and liabilities	2.7	(4.5)	(1.8)
Deferred tax	1.8	(14.4)	(12.6)
Provisions – non-current	0.0	(0.6)	(0.6)
Current assets and liabilities excluding cash	49.0	(89.4)	(40.4)
Bank Loan	0.0	(13.3)	(13.3)
Cash	41.7	(15.4)	26.3
Venue advances	8.9	0.0	8.9
Property, plant and equipment	2.3	0.0	2.3
Goodwill and intangibles	131.0	0.0	131.0
	Assets £m	Liabilities £m	Net assets £m

Net assets increased by £18.9 million to £99.8 million. The main changes are in cash (an increase of £7.5 million), goodwill and intangibles (an increase of £1.4 million) and the movement in derivative financial instruments on cash flow hedges and put option liabilities (an increase in net assets of £8.6 million).

Investment and capital expenditure

The Group's capital expenditure on plant and equipment for the year was £1.3 million (2011: £1.2 million) and included exhibition equipment, office fixtures and fittings. Capital expenditure on computer software in the year was £0.6 million (2011: £0.4 million). The increase seen this year reflects increased investment in computer software to enhance our exhibition visitor experiences and support our sales, marketing and accounting functions.

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.

In Moscow the Group utilises three venues:

Expocentr is ITE's principal venue in Moscow and hosts seven of its largest exhibitions including MosBuild, Moscow International Oil & Gas exhibition, Moscow International Travel & Tourism, World Food Moscow, TransRussia and Moscow International Protection & Security Exhibition. ITE has an agreement with Expocentr which secures the Group's rights to hold its exhibitions at the venue on agreed rates until 2015.

VVC is located in Central Moscow and hosts a number of events acquired with

the MVK portfolio in December 2010. ITE has an agreement with VVC, providing rights to hold its exhibitions at the venue on agreed rates to 2015.

Crocus is located on the outskirts of Moscow city centre and hosts a number of events including Expoelectronica and Rosupack. ITE has an agreement with Crocus on an event by event basis, providing rights to hold its exhibitions at the venue on agreed rates between 2013 and 2015.

Lenexpo is located in St Petersburg. ITE has an agreement with Lenexpo, providing rights to hold its exhibitions at the venue on agreed rates until 2013. Construction has now begun on a new venue for the city with completion due by 2014 and ITE has signed a protocol agreement covering its current events in the new venue.

Atakent Exhibition Centre is the largest venue in Almaty, Kazakhstan and hosts the Kazakhstan International Oil & Gas events and KazBuild exhibitions. ITE's agreement with Atakent confirms its rights to hold its exhibitions at the venue on agreed rates until 2017.

CNR is the principal venue in Istanbul, located close to the city's international airport, and holds the majority of the Group's Turkish exhibitions. ITE has an agreement with CNR which secures its rights to conduct its exhibitions at the venue on agreed rates until 2014.

The International Exhibition Centre

('IEC') is the principal venue in Kyiv and hosts all of the Group's Ukrainian events, including the Aquatherm exhibition and all events within the recently acquired Beautex and SIA portfolios. ITE has an agreement with IEC which secures its rights to conduct its exhibitions at the venue until 2014.

Expocentre Novosibirsk was opened in February 2012. ITE is the anchor tenant for the venue with exclusive occupancy rights for over six months of the year. The Group operates all of its Siberian exhibitions from this venue and has

contracted rights to operate on these terms until 2021.

Azexpo is the principal venue in Baku and hosts all of the Group's exhibitions in Azerbaijan. ITE has an agreement with Azexpo which secures its rights to conduct its exhibitions at the venue on agreed rates until 2015.

The Group funds the development of venues and facilities where improvements will enhance the prospects and profitability of its business. The funding can take the form of a prepayment of future venue fees

('advance payment'), or a loan which can be repaid by cash or by offset against future venue fees ('venue loan'). Generally, the funding brings rights over future venue use and advantageous pricing arrangements through longterm agreements. Venue loans and advance payments are included in the Balance Sheet under non-current and current assets.

At 30 September 2012, the Group's Sterling value of the outstanding balances of advance payments and venue loans was £8.9 million (2011: £10.1 million) as follows:

	30 September 2011 £m	New £m	Repayments £m	Forex £m	30 September 2012 £m
Kyiv	1.8	0.0	(0.4)	0.0	1.4
Almaty	1.8	1.6	(2.6)	0.0	0.8
St Petersburg	0.3	0.0	(0.3)	0.0	0.0
Uzbekistan	0.2	0.0	0.0	0.0	0.2
Azerbaijan	0.6	0.0	(0.1)	0.0	0.5
Crocus (Moscow)	0.3	0.0	(0.2)	0.1	0.2
CNR (Istanbul)	5.1	0.0	(2.7)	0.4	2.8
Novosibirsk (Siberia)	0.0	4.6	(1.6)	0.0	3.0
Total	10.1	6.2	(7.9)	0.5	8.9

Capital

During the year the Company issued 294,658 ordinary shares of 1p in the year. All of the total new issues were pursuant to the exercise of options and yielded aggregate consideration of £72,097. During the year the Company made no additional purchases of shares for the Employees Share Option Trust ('ESOT'). As at 30 September 2012 ESOT held 5,366,722 (2.2%) of the Company's issued share capital (2011: 8,102,687 (3.3%).

Treasury

During the year, the Group experienced a net foreign exchange gain of £0.3 million (2011: loss of £0.2 million). The exchange rate for the Euro at 30 September 2012 was ¤1.25:£1 (30 September 2011: ¤1.15:£1); the exchange rate for the US Dollar at 30 September 2012 was \$1.61:£1 (30 September 2011: \$1.56:£1).

During the year, 54% of the Group's sales were priced in Euros, 21% in Rubles, 7% in GBP, 1% in US Dollars, the balance being in various local currencies. Overall 62% of the Group's cash receipts for the period were collected in 'hard' currency (Sterling, Dollars or Euros) and 38% was collected in various local currencies, the majority being Rubles.

The Group uses derivative instruments and currency borrowings to protect itself against the effect of currency fluctuations on a proportion of its sales and its balance sheet. The Group's policy on derivative instruments is that:

• – it will hedge no more than 75% of the value of anticipated Euro denominated sales derived from outside Russia and the CIS; and
• – it will only enter into derivative transactions up to 36 months ahead.

finance director's statement continued

At 30 September 2012, the Group had entered into forward contracts to sell Euros for Sterling between October 2012 and September 2015. The value of the contracts is ¤102.2 million at an average rate of ¤1.18:£1. These contracts are designated as hedging instruments.

The Group finances its operations through cash holdings and banking facilities. The objective of the Group is to maximise investment income and minimise interest costs, bearing in mind its liquidity requirements.

During the year the Group entered into currency borrowing arrangements to minimise its exposure to foreign exchange risk on trade receivables. At 30 September 2012 the Group had borrowings of £13.3 million and US\$3.3 million through an overdraft facility and ¤16.7 million through a term facility with Barclays Bank.

Group borrowing facilities

The Group has long-term borrowing facilities provided by Barclays Bank. The arrangements, which were extended after the year end, extend until 30 June 2015 and consist of term and overdraft facilities totalling £30 million.

For short-term debt, such as overdraft facilities or debt with a term of less than twelve months, fixed or floating rates of interest are used. For debt with a term of greater than 12 months, when the borrowing is not covered by existing cash holdings, it is policy that at least 50% must have fixed rates of interest so as to minimise the Group's

exposure to interest rate movements. It is Group policy that its cash balances are not invested in instruments that would put the capital value at risk. All invested funds have a determinable rate of interest.

Liquidity risk

The Group policy is to ensure continuity of funding for operational needs through cash deposits and debt facilities as appropriate. The key requirement for the business is to maintain flexibility to allow the Group to take advantage of opportunities that could arise over the short-term. The needs of the business are determined on a rolling cash flow forecast basis, covering weekly, monthly and twelve monthly requirements. Short-term flexibility is maintained by holding cash in current accounts and high liquidity money market funds. The Group has overdraft facilities in place both to permit currency borrowing as part of its foreign exchange management and to allow flexibility in where it holds its cash balances.

The Group is conscious of the risks associated with holding deposits in foreign domiciled banks. The territories in which ITE operates do not all have internationally recognised banks and the Group has relationships with a number of domestic banks. The Group seeks to use the territories' leading banks and to minimise the level of cash held in such banks. Of the Group's total cash balance of £41.7 million as at 30 September 2012, 61% was held in institutions with a rating of grade A or above and 29% in B to BBB+.

Going concern

The Group and Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the CEO's Review and Divisional Trading Summary. The financial position of the Group and Company, its significant cash balance, its cash flow, liquidity position and absence of long-term borrowings are described within this Finance Director's statement. In addition, in the general information section and note 21 of the notes to the financial statements the Group and Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk are referred to.

After making enquiries, reviewing the Group and Company's forecasts and projections and taking account of reasonably possible changes in trading performance, the Directors have a reasonable expectation that the Group has adequate resources to continue its operations for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the Annual Report and Financial Statements.

risks and uncertainties

Risks and Uncertainties

The Group identifies and monitors the key risks and uncertainties affecting the Group and runs the business in a way that minimises the impact of such risks where possible.

Operational risks	Potential impact	Mitigation
Political uncertainty and regulatory risk	The Group's business is principally carried out in Russia, the CIS and Turkey. Changes in law or the regulatory environment could have an effect on some or all of the exhibitions of the Group.	ITE has reduced the risk by establishing its business as independent Russian, CIS and Turkish companies fully contributing to the local economy, and the diversity of businesses across sectors and geography provides protection for the longer-term prospects of the Group.
Economic instability reduces demand for exhibition space	Reduced demand for exhibition space would reduce the profits of exhibitions.	ITE operates across a wide range of sectors and countries to minimise the exposure to any single market. ITE, through its relationships with venues and staff has a relatively flexible cost structure, allowing it to manage its event margins in the short and medium term. This was clearly evidenced during the company's performance during the recent recession.
Commercial relationships	The Group has key commercial relationships with venues which secure the Group's rights to run its exhibitions in the future.	These key relationships are regularly reviewed and the Group seeks to maintain its exhibition rights for up to least three years forward for significant exhibitions where possible.
Venue availability	Damage to or unavailability of a particular venue could impact the Group's short-term trading position.	The Group carries business interruption insurance policies which protect profits on its largest events covering annual revenue of circa £120 million against such an event in the short term. In the longer-term the Group seeks to maintain good relationships with its principal venues to ensure the continuance of availability.
Competitor risk	Competition has existed in ITE's markets for some years. ITE faces competitive pressures on a market-by-market basis.	In all of its overseas markets, ITE has a strong position as an international organiser, achieved through effective use of its international sales network and its established brands for major events. A single exhibition or sector in a market could have its prospects curtailed by a strong competitor launch; however, the breadth of ITE's portfolio of events, with its geographic and sector diversity, reduce the risk of a competitive threat to the Group's overall business.
People	ITE's employees have long standing relationships with customers and a unique knowledge of the exhibitions business. Loss of key staff could impact the short-term prospects of a specific event or sector.	ITE has sought to build loyalty in its staff by ensuring remuneration is competitive and through a wide distribution of the Group's long-term incentive plans. ITE has a good record of retaining its key staff through both growth and recessionary times.
Financial risk – foreign currency risk	The Group is exposed to movements in foreign exchange rates against Sterling for both trading transactions and for the translation of overseas operations. The principal exposure is to the Euro and the Ruble which form the basis of the Group's invoicing and to the Ruble which forms the base books of the Group's Russian operations.	The Group seeks to minimise exposure by: – Protecting a certain amount of euro denominated sales with forward contracts. – Seeking to maximise the matching of costs and revenues in the same currency.

corporate social responsibility

Overview

The Board of ITE believes that corporate and social responsibility is an important part of the Group's culture and that the adoption of good practice will have a positive impact on profits and increase the long-term value for shareholders. Due consideration is given to risks arising from social, environmental and ethical issues as part of an ongoing risk review process.

Social interaction

The Board of the Company is aware of both the benefits to its business of engaging with its various constituencies in a socially-responsible manner and the risks of failing to do so. As an operator of internationally-focused businesses in emerging markets, the Company ensures that it is culturally sensitive in its dealings with the local community and that its employment and development policies are nondiscriminatory and encourage the employment of local nationals at all levels in the Company.

The Company actively supports its employees in their support of local community projects. Charitable donations across the group totalled over £36,000 (2011: £32,000).

In Russia the Group supports a number of local charities – particularly those involving children's charities. During 2012 this has included providing direct financial funding as well as providing volunteers to assist on specific projects and workshops.

In June, the Novosibirsk office took part in the 'Give Children a Smile' charity scheme supporting one of the region's orphanages. Staff from the local office cycled 20 miles to the orphanage and organised a day of fun activities and gifts for the children.

In London, the Group held charity auctions and sponsored activities, matching funds raised by employee contributions. The UK office, in partnership with other exhibition organising companies, is contributing to Hope for Children – Events for Namuwongo. Namuwongo is a slum on the edge of Kampala, Uganda, which has been adopted by the UK exhibitions industry to provide support and to work with the community to help them achieve their long‑term objectives.

The group is looking to increase further the number of its offices which take part in charitable activities.

Employees

Employees are selected and promoted on the basis of merit and ability, regardless of age, gender, race, religion, sexual orientation or disability. The Group has a policy of encouraging employees, especially those from the locations in emerging markets, to move around the offices of the Group, thus providing development opportunities for all staff. In addition, employees are assisted in their career development through an annual appraisal scheme and sponsored training is provided where there is a benefit to both the individual and the Company. All staff are eligible to receive share options or awards under the Employee's Performance Share Plan as the Board feels that it is important for them to take an active part in the success of the Company and to share in the long-term value they help to create. The Board recognises the need to provide a safe working environment for employees and exhibitors and visitors at the Group's events. Each office is responsible for ensuring that their business operates in compliance with Group policies and the relevant local health and safety legislation. Employees receive regular Health and Safety training. Staff from all regions with lead responsibility for the operation of the Group's exhibitions on-site also attend regular training courses.

Ethics

Integrity is core to the Group's values which it actively promotes in its dealings with employees, shareholders, customers and suppliers and with the authorities of the countries in which it

operates, and recognises that reputation is a valuable and fragile asset gained over a substantial period. The leadership position of the Group's exhibitions and the long-term growth of its core shows is a testament to the success of its practices.

All ITE staff are required to comply with the laws and regulations of the country in which the Group operates. The Group promotes high ethical standards in carrying out its business activities and has clear guidelines for dealing with gifts, hospitality, corruption, fraud and the use of inside information. These are available to all staff on the Group intranet.

The UK Bribery Act places obligations on the Group and senior management. We have worked with an external web-based learning solution provider to develop and deliver an e-learning course to train and test key management on the UK Bribery Act. The course was customised to meet the requirements of our business and was available to staff in both Russian and English languages. The course was designed to provide Act awareness training for key employees and covers the requirements of the new Act along with example scenarios and implications of Act breaches.

The Group is a member of UFI (the Worldwide Exhibition Organisers Association) and through this, the attendance figures at our key exhibitions are audited by independent services. This helps to provide assurance to our exhibitors and visitors as to the standard of our exhibitions. The Group aims to provide high quality of service at all its events in all locations. The Group operates to a strict minimum quality level to ensure events are provided to exhibitors and visitors at international standards, irrespective of where they are held.

The Group ensures that all advertising and public communications avoid untruths or overstatements. ITE builds a relationship with suppliers based on

Environment

As a media services company, the Group acknowledges that its business has an impact on the environment, albeit relatively minor, and ITE recognises the importance of following good environmental practice. The Company is aware that this is an area of increasing concern to employees, shareholders and customers alike. The Company does not manufacture or sell any tangible products and has identified the principal areas of environmental impact as energy use, waste recycling, paper & printing and travel.

The London and Huddersfield offices continued to engage the services of 'Carbon Smart'. The UK operation of the Group has again been awarded the Carbon Smart Silver Award, following the award of the Blue Award in 2010.

During 2012, 'Carbon Smart' reassessed these offices' Carbon Footprint. Their carbon footprint was found to have been increased to 362 tonnes CO2e (2011: 306 tonnes) which equated to 2.4 tonnes of CO2e per employee per year (2011: 2.3 tonnes). The increase during the year is due primarily to increased staff air travel as the Group expands in Asia but still compares favourably to the average UK employee (3 tonnes of CO2e emissions per year).

The Group also achieved ISO 14001 (environmental management) certification in February 2012.

By identifying environmental improvements, we expect to see increased efficiencies and with that reduced costs and the management of environmental issues is part of our business strategy to create long-term value for shareholders. The Group already undertakes a number of initiatives aimed at reducing its carbon footprint:

• – The Group encourages the recycling of waste paper and other office waste and plans to increase the recycling rates and materials recycled throughout the Group. The Group continues to expand on the 'paid for' waste recycling initiative by introducing more waste recycling facilities to allow recycling of a wider range of materials.
• – The Group has installed videoconferencing facilities at its Baku, Krasnodar and Novosibirsk offices, adding to the existing facilities in London, Huddersfield, Moscow, St Petersburg, Kiev, Istanbul, Almaty, Delhi and Hamburg offices to reduce staff travel requirements.
• – Computers and IT equipment are recycled where possible and redundant equipment is either sold to staff or given to charitable organisations.
• – The Group has been reducing its printed materials over the last few years, with a greater reliance on electronic media for its marketing materials. However, catalogues and delegate packs are still printed and the Group considers and, where possible, uses controlled source material with recycled content.

'Hope for Children' Uganda BUPA 10k sponsored run 'Give Children a Smile' in Siberia

• – The Group encourages staff to use public transport through offering season ticket loans for London staff.
• – The Group is taking advantage of recent e-communications legislation for communicating with shareholders and so will be able to reduce the volume of printed materials produced with the publication of our Annual Report and Interim Statement.

The Group's activities in staging exhibitions and conferences do impact on the environment. The environment is impacted through the utilisation of natural resources for assembling exhibition stands, and travel to both exhibitions and conferences for exhibitors, delegates and ITE staff. Presently, practice in controlling waste at different exhibition centres varies widely through the different regions in which the Group operates. The Group follows current best practice in each of its markets by observing industry and country legislation.

board of directors

1 Russell Taylor (54) Chief Executive Officer

Russell Taylor was appointed Chief Executive in May 2008 having joined ITE in March 2003 as Finance Director. He has extensive experience of all sectors of the exhibition industry, having earlier in his career spent seven years at Earls Court Olympia Group, as Group Finance Director and subsequently Managing Director of Earls Court & Olympia Halls. He is a qualified Chartered Accountant, having trained at Touche Ross & Co, where he became a Manager in the Corporate Finance Department. He holds a BA in Economics.

2 Edward Strachan (48) Executive Director

Edward Strachan joined ITE Group in 1993 when he launched the ITE Group's local business in Kazakhstan. Since then he has opened and managed ITE Group's operations in St Petersburg, Turkey, Kazakhstan, Uzbekistan and Azerbaijan and currently lives abroad in the CIS. He became a main Board Director in July 2003 and brings to the Board his extensive experience of the exhibition industry in Russia and the CIS regions.

3 Linda Jensen (48) Non-executive Director Audit, Remuneration and Nomination Committees

Linda Jensen was appointed a Nonexecutive Director of the Company on 7 July 2011. She is CEO of HBO Europe, a position she has held since February 2005, and is responsible for all business operations of the HBO channels in the European region, currently covering 14 markets. From 2000 to early 2005, she was the President of MTV Russia, based in Moscow. Prior to MTV Russia, she gained valuable experience in the central European region as the Director of Development at Central European Media Enterprises ('CME'). Fluent in Russian, she holds a Masters degree in Political Science from Columbia University.

4 Michael Hartley (63)

Non-executive Director Audit, Remuneration and Nomination Committees

Michael Hartley was appointed a Non-executive Director of the Company in October 2003 and is currently Chairman of the Audit Committee and Senior Independent Director. He brings extensive international management experience to the Board, having spent 16 years with Coats Viyella plc, for the last three years as Chief Executive of the Viyella division. He has worked extensively in Asia, Australasia and Africa. Mr Hartley was, until 2009, Chairman of Dawson International plc and is currently Chairman of privately owned

recruitment business Hartley Resourcing Limited. He holds an MBA from Manchester Business School.

5 Neil Jones (46) Finance Director

Neil Jones was appointed as Finance Director in November 2008. He has held senior financial positions within the exhibitions industry for over ten years. He was formerly Finance Director at Tarsus Group plc, which specialises in the organisation of trade exhibitions in Europe, America, UAE and Asia. Prior to that, he was European Finance Director for Advanstar Communications, one of the largest US media groups. Neil is a member of the Institute of Chartered Accountants of England & Wales, qualifying with Price Waterhouse in 1990.

6 Neil England (58)

Non-executive Director Audit, Remuneration and Nomination Committees

Neil England was appointed a Nonexecutive Director of the Company in March 2008 and is currently Chairman of the Remuneration Committee. He has a breadth of sales and marketing experience and an extensive knowledge of ITE's key geographic markets. He was formerly Vice President for Mars Incorporated with responsibility for all the CIS countries and he built a market-leading business there. More recently, he was Group Commercial Director on the main board of Gallaher Group Plc. He is currently Nonexecutive Chairman of four companies including the Eastern European Trust Plc, an emerging market trust investing in Eastern Europe. Neil is a Fellow of the Chartered Institute of Marketing.

7 Marco Sodi (54) Non-executive Chairman

Marco Sodi was appointed a Nonexecutive Director on 1 February 2012 and took over as Chairman of ITE on 23 March 2012. He was a Non-executive Director of ITE from 2003 to 2006 and has extensive experience of the media sector, and the exhibitions sector in particular. He left VSS in March 2010 after 23 successful years as both a General Partner and Investment Committee member and is currently a Non-executive Director of Data Centrum Communications and Advisory Board Member of the Antenna Group. Previously he has served on the Boards of Hemscott plc, Centaur Communications plc, Pepcom GmbH, Berliner Verlag, CSC Media Group plc, Granada Learning plc and Clarion plc.

DIRECTORS' REPORT

The Directors have pleasure in submitting their report and the audited financial statements for the year ended 30 September 2012.

Principal activities and review of business

The principal activities of the Group comprise the organisation of trade exhibitions and conferences. The main subsidiary and associate undertakings which affect the profits or net assets of the Group in the year are listed in note 5 to the financial statements of the Company.

Details of the Group's performance during the year and expected future developments are contained in the Chief Executive's review on pages 8 to 11 and in the Divisional trading summary on pages 22 to 31. Details of the Group's financial risk management policies are contained on page 37.

Results and dividends

The audited accounts for the year ended 30 September 2012 are set out on pages 60 to 66. The Group profit for the year, after taxation and non-controlling interests, was £32.5 million (2011: £30.8 million).

The Directors recommend a final dividend of 4.4p (2011: 4.2p). The total dividend for the year, including the proposed final dividend, is 6.5p (2011: 6.1p).

Capital structure

Details of the Company's issued share capital and movements during the year are shown in note 23. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights.

Details of employee share schemes are set out in note 26. The Trustee of the ITE Group Share Trust is not permitted to vote on any unvested shares held in the trust unless expressly directed to do so by the Company. A dividend waiver is in place in respect of the Trustee's holding.

No person has any special rights of control over the Company's share capital and all shares are fully paid.

The Company's Articles of Association may be amended by a special resolution at a general meeting of the shareholders. There is a schedule of matters reserved for the Board and terms of reference for Board Committees, copies of which are available on request, and the Corporate Governance Statement can be found on pages 45 to 47.

There are a number of agreements that take effect, alter or terminate upon a change of control of the Company such as commercial contracts, bank facility agreements, property lease arrangements and employees' share plans. None of these are considered to be significant in terms of their likely impact on the business of the Group as a whole. Furthermore, the Directors are not aware of any agreements between the Company and its Directors or employees that provide compensation for loss of office or employment that occurs because of a takeover bid.

Directors

The Directors who served throughout the year are as follows:

Executive Directors	Non-executive Directors
Russell Taylor	Marco Sodi (appointed 1 February 2012)
Edward Strachan	Iain Paterson (resigned 23 March 2012)
Neil Jones	Michael Hartley
	Neil England
	Linda Jensen

Their biographical details are set out on pages 40 and 41.

Under the Company's current Articles of Association, one-third of the Directors must retire by rotation each year. However, in line with the recommendation set out in the UK Corporate Governance Code issued in 2010 regarding annual re-election, all the Directors will offer themselves for re-election at the 2013 AGM.

Substantial shareholdings

At 27 November 2012, the Company had been notified under Rule 5 of the Financial Services Authority's Disclosure and Transparency Rules of the following interests in its ordinary shares:

	Percentage
shares	held
	15.48
	11.84
	7.49
	6.96
	6.51
	4.56
	4.32
	Number of 38,516,947 29,459,003 18,646,956 17,331,750 16,195,035 11,352,874 10,747,715

Directors' share interests

The Directors who held office at 30 September 2012 had the following interests in the ordinary shares of the Company:

Name of Director	30 September 2012	30 September 2011
Executive Neil Jones Edward Strachan Russell Taylor	120,868 1,689,029 1,560,000	35,868 1,439,029 1,441,839
Non-executive Marco Sodi Neil England Michael Hartley Linda Jensen	75,000 50,000 14,839 –	– 50,000 14,839 –

The Directors, as employees and potential beneficiaries, have an interest in 2,273,500 shares held by the ITE Group Employee's Share Trust at 30 September 2012. ITE Group Employee Share Trust held 5,366,722 shares at 3 December 2012.

There were no changes in the interests of Directors between 30 September 2012 and 3 December 2012.

Authority to purchase the Company's shares

At the AGM on 26 January 2012, shareholders authorised the Company to make one or more market purchases of up to 24,856,874 of the Company's ordinary shares to be held in treasury at a price between 1p (exclusive of expenses) and 105% of the average middle market price of a share for the five business days immediately preceding the date on which the share is purchased.

No purchases were made during the year and the Directors propose to renew this authority at the 2013 AGM.

Donations

The Group made £36,000 of charitable donations (2011: £32,000) during the year. No political donations were made (2011: nil).

Employees

The Group's human resources strategy is to attract and retain talented, high-calibre employees focused on achieving excellent results. The Remuneration policy is designed to achieve this aim.

The Group places great importance in the development of its staff to support the business in meeting its objectives. This is reflected in the training initiatives in place for staff, both internally and externally. The Group keeps employees informed on matters affecting them and on matters affecting the Group's performance through regular newsletters and through meetings, both formal and informal. Employees are able and are encouraged to move around the Group in order to experience the business environment in other offices. The Group actively encourages the participation of employees in activities of offices other than their own. The Group distributes long-term incentives widely to staff in all offices. At 30 September 2012 approximately 50.7% of staff held long-term incentives in some form. As a result, the Group's employees identify strongly with ITE's overall objectives.

It is the Group's policy to consider fully applications for employment by disabled persons, bearing in mind a number of factors including their suitability and fit for the role, irrespective of any disability. In the event of a member of staff becoming disabled, every effort would be made to ensure their continued employment and progression in the Group. It is Group policy that training, career development and promotion of disabled employees match that of other employees as far as possible.

DIRECTORS' REPORT continued

Supplier payment policy

The Company's policy, which is also applied to the Group, is to agree payment terms with suppliers when entering into each transaction to ensure that suppliers are made aware of the terms of payment and abide by the terms of payment. The Company has no trade creditors. Trade creditors of the Group at 30 September 2012 were equivalent to 4.8 days (2011: 4.0 days) purchases, based on the average daily amount invoiced by suppliers during the year.

Annual General Meeting

The Notice convening the AGM to be held at 12 noon on 31 January 2013 is contained in a circular sent to shareholders at the same time as this report.

Auditors

Deloitte LLP have expressed their willingness to continue in office. A resolution to reappoint them as the Company's auditors and to authorise the Directors to determine their remuneration will be proposed at the forthcoming AGM.

Directors' statement as to disclosure of information to auditors

• Each Director of the Company at the date when this report was approved confirms:
• – so far as each of the Directors is aware, there is no relevant audit information (as defined by the Companies Act 2006) of which the Company's auditors are unaware; and
• – each of the Directors has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

This confirmation is given in accordance with section 396 of the Companies Act 2006.

By Order of the Board

John Price Company Secretary 3 December 2012

Corporate governance report

UK Corporate Governance Code Compliance

The Company is committed to high standards of corporate governance and supports the principles laid down in the UK Corporate Governance Code issued by the Financial Reporting Council in May 2010 ('the Code'). This statement describes how the principles of the Code are applied and reports on the Company's compliance with the Code's provisions.

The Board considers that the Company has been in compliance with all the principles and provisions of the Code throughout the year ended 30 September 2012 and to the date of this report.

The Board

The Board of Directors ('the Board') currently has seven members, comprising the Non-executive Chairman, Chief Executive, Finance Director, an additional Executive Director, and three independent Non-executive Directors.

All the Directors bring strong judgement to the Board's deliberations. The Board is of sufficient size and diversity that the balance of skills and experience is considered to be appropriate for the requirements of the business.

The Non-executive Directors are all independent of management and free from any business or other relationship, including those relationships and circumstances referred to in provision B.1.1 of the Code that could materially interfere with the exercise of independent and objective judgement. The Company considers that the Chairman was independent on appointment.

The Non-executive Directors were all appointed for an initial three-year term and, thereafter, subject to satisfactory performance, may serve additional three-year terms.

Michael Hartley has served on the Board for more than nine years, having been a Non-executive Director since October 2003. The Board highly values Mr Hartley's international experience and knowledge of the sector in which ITE operates, and considers that the quality of his continuing contribution to Board debate demonstrates an appropriate measure of objective analysis and challenge. It therefore considers him to continue to be independent.

The Chairman and Chief Executive

The different roles of the Chairman and Chief Executive are acknowledged. A responsibility statement for each of those roles has been agreed and adopted by the Board.

Senior Independent Non-executive Director

Michael Hartley was the senior independent Non-executive Director throughout 2012. His responsibilities included leading the recruitment process for the new Chairman, being available to liaise with shareholders who have concerns which are not resolved through the normal channels, being a sounding board for the Chairman and leading the annual performance evaluation of the Chairman.

The Directors

The biographical details of the Board members are set out on pages 40 and 41. The Directors have all occupied, or occupy, senior positions in UK and/or non-UK listed companies and have substantial experience in business. The Non-executive Directors do not participate in any of the Group's pension schemes or in any of the Group's bonus, share option or other incentive schemes. At all times at least half the Board, excluding the Chairman, has comprised independent Non-executive Directors. At the AGM on 31 January 2013 all the Directors will once again offer themselves for re-election in compliance with Code provision B.7.1.

Role of the Board

The Board is collectively responsible for the proper management of the Company. The Board normally meets not less than seven times each financial year and has a formal schedule of matters reserved to it for decision making, including responsibility for the overall management and performance of the Group and the approval of its long‑term objectives and commercial strategy, approval of annual and interim results, annual budgets, material acquisitions and disposals, material agreements and major capital commitments, approval of treasury policies, and assessment of its going concern position.

Board members receive appropriate documentation in advance of each Board or Committee meeting which normally includes a detailed report on current trading and full papers on matters where the Board will be required to make a decision or give approval.

There is an established procedure for the preparation and review, at least annually, by the Board of medium-term plans and the annual budget. The business reports monthly on its performance against its agreed budget. The Board receives a monthly update on performance and reviews any significant variances. All major investment decisions are subject to post‑completion reviews.

During the year the Chairman met with the Non-executive Directors without the Executive Directors present.

Directors' and Officers' insurance cover, is provided by the Company, in line with normal market practice, for the benefit of Directors in respect of claims arising in the performance of their duties.

Corporate governance report continued

Board effectiveness review

The formal annual review of the performance of the Board, its Committees and the Directors was carried out before the year end. This consisted of an internally run exercise led by the Chairman assisted by the Company Secretary. The appraisal questionnaire used as part of the process was wide-ranging and included questions covering both Board and Committee performance. Individual performance was reviewed by the Chairman who, in turn, was appraised by the Senior Independent Director after consultation with both the other Non-executive Directors and the Executive Directors.

The appraisal confirmed that the Board and its Committees were operating effectively. The feedback received from the review resulted in a clear action plan for the year ahead which includes further refinement of the Group's strategic objectives, the ongoing development of senior management, closer monitoring of relationships with key partners and stakeholders, and improving the ways the Group communicates internally.

Independent professional advice

The Board has approved a procedure for Directors to take independent professional advice at the Company's expense, if required. No such advice was sought by any Director during the year. In addition, the Directors have direct access to the advice and services of the Company Secretary.

Training and development

An induction programme is arranged for newly-appointed Directors which includes presentations on the business, current strategy and shareholder expectations. Guidance is also given on the duties, responsibilities and liabilities of a Director of a listed company and key Board policies and procedures. Business familiarisation involves Directors visiting exhibitions in markets in which the Group operates to gain a greater understanding of the Group's activities and to meet senior managers throughout the business.

Every Director has access to training as required and is encouraged to continue his or her own professional development through attendance at seminars and briefings. During the year, Linda Jensen completed the Financial Times Non-executive Director Certificate programme, which is a formally accredited post-graduate level qualification for non-executives.

Conflicts of interest

The Company's Articles of Association, in line with the Companies Act 2006, allow the Board to authorise potential conflicts of interest that may arise and impose limits or conditions, as appropriate. The Company has established a procedure whereby any decision of the Board to authorise a conflict of interest is only effective if it is agreed without the conflicted Directors voting or without their votes being counted. In making such a decision, as always, the Directors must act in a way they consider in good faith will be most likely to promote the success of the Company. No request to authorise an actual or potential conflict of interest was made during the year.

Board Committees

There are a number of standing Committees of the Board to which various matters are delegated. They all have formal terms of reference approved by the Board which are available on the Group's website (www.ite-exhibitions.com). Their reports are set out on pages 49 to 58.

Attendance at meetings

Attendance of Directors at Board and Committee meetings during the year was as follows:

	Board	Audit Committee	Remuneration Committee	Nomination Committee
Neil England	7	5	7	4
Michael Hartley	7	5	7	6
Linda Jensen	7	5	7	6
Neil Jones	7	–	–	-
Iain Paterson (resigned 23 March 2012)	3	–	4	5
Marco Sodi (appointed 1 February 2012)	5	–	4	2
Edward Strachan	7	–	–	–
Russell Taylor	7	–	–	–
Total number of meetings	7	5	7	6

Shareholder relations

The Company is committed to ongoing engagement with shareholders and has a well established cycle of communication based on the Group's financial reporting calendar. The Chairman, Chief Executive and Finance Director, have dialogue with individual institutional shareholders and general presentations are given to analysts and investors covering the annual and interim results. During the year, a presentation was made to Board members by the Company's brokers' to update them on the views of major shareholders about the Company. The Board also received institutional and analysts' feedback following both the interim and annual results roadshows.

The Business Review set out on pages 8 to 39 details the financial performance of the Company as well as setting out the risks it faces and plans for the future. All shareholders will have the opportunity to ask questions at the Company's AGM on 31 January 2013. At the AGM, the Chairman will give a statement on current trading conditions. The Chairmen of the Nomination, Remuneration and Audit Committees will be available to answer questions at the AGM. In addition, the Group's website containing published information and press releases can be found at www.ite-exhibitions.com

Whistle-blowing arrangements

The Company has an established policy which enables and encourages staff to report in confidence any possible improprieties in either financial reporting or other matters.

Corporate social responsibility

Neil Jones, Finance Director, is the Board sponsor for environmental, social governance, community investment and other corporate social responsibility matters.

ASB Guidance on narrative reporting

The Company considers that it is in compliance with the additional guidance on narrative reporting for UK companies published by the Accounting Standards Board in January 2008.

Anti-corruption policy

As part of ITE's commitment to preventing bribery and establishing a culture that does not tolerate corruption wherever and in whatever form it may be encountered, a formal anti-corruption policy was approved by the Board in 2011 and appropriate procedures put in place, in line with guidance provided by the Ministry of Justice to ensure compliance with current legislation and the Company's policy and related procedures. During the year anti-bribery and corruption training was rolled out to the Board and the Group's senior management as part of an ongoing programme to heighten awareness of this subject.

Directors' responsibilities statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing the Parent Company financial statements, the Directors are required to:

• – select suitable accounting policies and then apply them consistently;
• – make judgements and accounting estimates that are reasonable and prudent;
• – state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
• – prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard requires that Directors:

• – properly select and apply accounting policies;
• – present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• – provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
• – make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

• – the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• – the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

Russell Taylor Chief Executive Officer Neil Jones Finance Director 3 December 2012 3 December 2012

Audit Committee Report

The Audit Committee comprises Neil England and Linda Jensen and is chaired by Michael Hartley. The Board is satisfied that Michael Hartley has appropriate financial expertise to fulfil this role.

Its role is to monitor the financial reporting process, the integrity of the Group's interim and annual financial statements prior to their submission to the Board and the statutory audit of the annual and consolidated accounts. It is also responsible for reviewing the Group's internal financial control and risk management systems, advising the Board on the appointment of external auditors, overseeing the relationship with the external auditors, approving auditor remuneration, reviewing the Group's whistle‑blowing procedures, reviewing accounting policies and compliance, and monitoring and reviewing the effectiveness of the Group's internal audit function.

The Committee met five times during the year. On each occasion the Finance Director, and other members of staff as required, attended by invitation. The external auditors attended all five meetings. Significant areas of work covered by the Audit Committee included:

• – Reviewing the Group's final and interim financial statements;
• – Reviewing results from audits undertaken and progress against the internal audit plan;
• – Identifying, evaluating and managing the key risks faced by the Group;
• – Reviewing the issues raised in the Management Letter by the auditors and the actions taken to address them by the Group; and
• – Reviewing the Group's internal control environment and its effectiveness.

The Audit Committee regularly monitors the relationship with, Deloitte LLP, the external auditors and assesses their performance, cost-effectiveness, objectivity and independence. It agrees the scope of the audit work and discusses the results of the full year audit and interim review each year. At each Audit Committee meeting the external auditors are able to meet with the Committee without management being present and did so at least once in the year.

Deloitte LLP were first appointed by the Company in 2002. The current audit partner was appointed in 2008 and will be replaced by rotation following the completion of the 2012 audit. A rigorous process was conducted by the Chairman of the Audit Committee together with the Finance Director to select the new lead audit partner. The Committee recommend their reappointment for 2012/13 and judges them on the quality of their audit findings, management's response and stakeholder feedback. It also took note of the findings set out in the Public Report on the 2011–12 inspection of Deloitte carried out by the Audit Inspection Unit. Furthermore, the Committee considers their independence is displayed through their challenge to management.

It is a specific responsibility of the Audit Committee to ensure that an appropriate relationship is maintained between the Group and its auditors. The Group has a policy of controlling the provision of non-audit services by the external auditors in order to maintain their independence and ensure that their objectivity and independence are safeguarded. This control is exercised by ensuring non-audit projects, where fees are expected to exceed £50,000, are subject to the prior approval of the Chairman of the Audit Committee, who reports any such approvals at the next meeting of the Audit Committee. In addition, where a proposed service is outside the normal scope of non-audit services, the engagement must be approved in advance by the Chairman of the Audit Committee. In awarding work for non-audit services, the Group takes into account a range of factors including quality of service, cost effectiveness, and historic knowledge of the business or sector. The Committee has scrutinised the internal procedures of Deloitte LLP and satisfied itself that the independence and objectivity of the auditors are not affected by the non-audit work undertaken.

Full details of the split between audit and non-audit fees can be found in note 6 on page 77.

Internal audit function

The Group engages KPMG to perform internal control audits at its main offices. This work is coordinated by the Head of Internal Controls and Procedures who reports KPMG's findings directly to the Audit Committee. The Audit Committee considers the Group to have an effective independent internal audit function.

Internal control

The Board has overall responsibility for the Group's system of internal control and risk management and for reviewing its effectiveness. In discharging that responsibility, the Board confirms that it has established the procedures necessary to apply the Code, including clear operating procedures, lines of responsibility and delegated authority, which are reviewed regularly.

Business performance is managed closely and the Board has established processes, as part of the normal good management of the business, to monitor:

• – Strategic plan achievement, through a regular review of progress towards strategic objectives;
• – Financial performance, within a comprehensive financial planning and accounting framework, including budgeting and forecasting, financial reporting, analysing variances against plan, exchange rate volatility, and taking appropriate management action;
• – Capital investment and asset management performance, with detailed appraisal, authorisation and post investment reviews; and

Audit Committee Report continued

– Principal risks and risk management processes, which accords with the Turnbull guidance, and that the significant risks faced by the Group are being identified, evaluated and appropriately managed, having regard to the balance of risk, cost and opportunity.

Risk management process

There is in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, which has operated throughout the financial year. These are reviewed by the Board at each meeting and also in detail by the Audit Committee once a year. The risk framework governs the management and control of both financial and non-financial risks. The adoption of this policy throughout the Group enables a consistent approach to the management of risk at both regional and business unit level.

In addition, during the financial year, the Audit Committee received:

• – Reports from the Head of Internal Controls and Procedures on the work carried out under the annual internal audit plan;
• – Risk management reports, including the status of actions to mitigate major risks and the quantification of selected risks
• both at Group level and by each individual business unit; and,
• – Reports from the external auditors.

Through the monitoring processes set out above, the Board conducted a review of the effectiveness of the system of internal control during the financial year. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. In that context, the review, in the opinion of the Board, did not indicate that the system was ineffective or unsatisfactory and the Board is not aware of any change to this status up to the approval of this report.

Michael Hartley Chairman of the Audit Committee 3 December 2012

Nomination Committee Report

The Nomination Committee comprises Neil England, Michael Hartley and Linda Jensen and is chaired by Marco Sodi following his appointment to the Board on 1 February 2012. Iain Paterson also served as a member until 23 March 2012.

It meets as required and is responsible for considering and recommending to the Board suitable candidates for appointment as Executive and Non-executive Directors. There is a formal, rigorous and transparent procedure for the appointment of new Directors to the Board which involves the Nomination Committee interviewing candidates proposed by either existing Board members or by an external search company. Careful consideration is given to ensure appointees have enough time available to devote to the role and that the balance of skills, knowledge and experience on the Board is maintained. When dealing with the appointment of a successor to the Chairman, the senior independent Non-executive Director will chair the Committee instead of the Chairman. When the Committee has found a suitable candidate, the Chairman of the Committee will make a proposal to the whole Board and the appointment is the responsibility of the whole Board following recommendation from the Committee.

The Committee recognise the importance and benefits of diversity which is taken into account in our recruitment processes. Our aim is to ensure that there is a relevant and appropriate balance of skills, experience and background in our Board members and we will continue to have regard to the importance of diversity going forward.

The Committee met six times during the year and was active in the appointment of ITE's new Non-executive Chairman, Marco Sodi. Led by the senior independent Director, Michael Hartley, an appointment specification for the role was developed by the Committee following which, Zygos, external search consultants, were commissioned to carry out a search and review of prospective internal and external candidates. After completion of a rigorous interview process, the Committee's recommendation that Marco Sodi be appointed was passed unanimously by the Board, with Marco formally joining the Company as a Non-executive Director and Chairman Designate on 1 February 2012, and taking over as Chairman on 23 March 2012.

Other activities during the year included:

• – Further development of succession planning and talent mapping processes for senior management
• – Reviewing the balance of skills and experience on the Board and considering if any changes were necessary
• – Considering the responses to the questionnaire used for the annual evaluation of the Board and its Committees, prior to review by the whole Board.

Marco Sodi Chairman of the Nomination Committee 3 December 2012

Remuneration committee report

This report has been prepared in accordance with the Companies Act 2006 ('the Act') and Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the UK Listing Authority and the UK Corporate Governance Code. As required by the Act, a resolution to approve the report will be proposed at the Company's AGM at which the financial statements will be approved.

The Act requires the auditors to report to the Company's members on certain parts of the Directors' remuneration report and to state whether in their opinion those parts of the report have been properly prepared in accordance with the relevant regulations. This report has therefore been divided into separate sections for audited and unaudited information.

Unaudited information

The Remuneration Committee

The members of the Remuneration Committee ('the Committee') are the Group's four Non-executive Directors, Neil England (Chairman), Michael Hartley, Linda Jensen and Marco Sodi (following his appointment to the Board on 1 February 2012). Iain Paterson also served on the Committee until 23 March 2012 when he stepped down from the Board.

The Remuneration Committee is responsible for:

• – Recommending to the Board the remuneration and terms and conditions of employment of the Chairman (who absents himself from discussions regarding his own remuneration), Executive Directors and key members of senior management;
• – Measuring subsequent performance as a prelude to determining the Executive Directors' and key managers' total remuneration on behalf of the whole Board;
• – Determining the structure and quantum of short-term remuneration; and
• – Granting awards under the ITE Group's Performance Share Plans and options under the various ITE Group Share Option Schemes outlined below.

Kepler Associates, appointed by the Committee in July 2012, provided independent advice on executive remuneration and the operation of the various ITE Group share schemes. Kepler replaced NBS and provided no other services to the Company.

The terms of reference of the Remuneration Committee are available on the Company's corporate website.

Remuneration policy

The Company's principal remuneration policy aim is to ensure that the compensation offered is appropriate to attract, retain and motivate Executive Directors and staff with the ability and experience to deliver the Company's strategy and grow the business, having regard to the prevailing economic conditions and competition for such people in the markets in which the Company operates.

In formulating its policies the Committee has regard to and balances the following factors:

• a) the remuneration packages offered to executives in companies competing in the same markets as the Company;
• b) the remuneration practice in the markets in which the executive is principally based;
• c) the need to align the interests of the executive with those of the shareholders;
• d) the performance of the individual executive and of the Company as a whole; and

e) any amounts payable to executives in respect of services performed for the non-controlling interests of the Company.

The Committee Chairman liaises with the Group's independent remuneration adviser and others to ensure that pay and employment conditions in the Group as a whole are taken into account (in determining salary levels, benefits, pension provision, bonus payments and long-term incentive opportunity) when framing the executive remuneration policy.

In line with the Association of British Insurers' Guidelines on Responsible Investment Disclosure, the Committee ensures that the incentive structure for Executive Directors and senior management does not raise environmental, social or governance risks by inadvertently motivating irresponsible behaviour. More generally, the Committee regularly reviews the overall remuneration policy to ensure it reinforces effective risk management.

In addition, the Committee regularly reviews the executive remuneration policy to ensure that it takes due account of market practice, best practice and the specific circumstances of the Company.

The remuneration packages of the executives comprise base salary and benefits, a performance-related bonus and longer-term share-based incentive arrangements. A significant proportion of Executive Directors' remuneration is, therefore, performance related.

Alignment of remuneration policy with corporate strategy

Compensation type	Link to corporate strategy	Summary details
Base salary	Set at competitive levels in the markets in which we operate, in order to attract executives capable of meeting the ITE Key Performance Indicators set out on page 12	Reviewed annually.
Annual performance bonus	Designed to reinforce individual performance and contribution to the achievement of headline PBT and strategic objectives. ITE's Key Performance Indicators are set out on page 12	Maximum potential opportunity of up to 100% of base salary p.a. paid in cash subject to stretching targets for financial performance and personal criteria.
Long Term Incentive (Performance Share Plan)	Ensures that the Executive Directors interests are aligned with those of shareholders through rewarding sustained growth in headline EPS over the medium to long term, and delivery in shares	Potential annual grants of up to 100% of base salary p.a. subject to aggregate three year headline earnings per share targets.

Policy criteria for various components

Base salary

Base salary levels are reviewed annually by the Committee taking into account each Executive Director's role, experience, performance and the markets in which they perform their duties. The Committee benchmarks the base salaries of Russell Taylor and Neil Jones, and the consultancy remuneration of Edward Strachan against companies of similar size and industry comparators.

During the year under review, Russell Taylor's base salary was increased from £400,000 to £415,000 p.a. from 1 February 2012 and Neil Jones' base salary was increased from £235,000 to £243,000 p.a. from 1 October 2012. These increases (3.75% and 3.4%, respectively) are broadly in line with the average annual increase awarded to UK based employees.

A new one year Consultancy Agreement was entered into with Kyzyl Tan Eurasian Advisors Limited ('Kyzyl Tan') in respect of Edward Strachan's services for the period 1 April 2012 to 31 March 2013. Under its terms Kyzyl Tan receives a consultancy fee of £212,000 p.a (2011: £263,000). The reduction in consultancy fee relates to a reduction in the scope of services provided under the Consultancy Agreement from 1 April 2012. The Agreement may be extended for a further period or periods by mutual agreement.

Details of the Executive Directors' base salaries for the year commencing 1 October 2012 are also set out under 'Directors' service contracts' on page 55 of this report.

Variable bonus

Russell Taylor, Neil Jones and Edward Strachan together with a number of other members of senior management participate in performance-related annual bonus schemes ('Executive Bonus Plan'), which reinforce Company objectives to deliver growth in headline profit before tax.

During the year under review, Russell Taylor's and Neil Jones' maximum annual bonus opportunities provided under the Executive Bonus Plan were 100% and 90% of base salary respectively. Edward Strachan's annual bonus opportunity through the Company's consultancy agreement with Kyzyl Tan was capped at 100% of the Kyzyl Tan consultancy fee for the period plus his remuneration as a Director for the remaining six month period of the contract to 31 March 2012. In each case, the annual bonus opportunity was split between financial targets (80% of potential) and personal targets (20% of potential).

The financial element of the bonus in 2012 was based upon the achievement of headline profit before tax. The target was based on the annual budget approved by the Board, but adjusted to provide an appropriate degree of 'stretch' challenge and an incentive to outperform. A range for headline profit before tax was set of £48 million to £54 million to be calculated on a straight line basis from 0% of potential at £48 million to 100% of potential at £54 million. The actual results calculated on this basis were for headline profits before tax of £53.0 million and accordingly 83% of potential bonus on the financial element was earned by the Executive Directors.

Personal objectives for Russell Taylor are set by the Chairman; and for Neil Jones and Edward Strachan by the Chief Executive. In all cases these are reviewed and approved by the remuneration committee in advance who also approve recommendations on the level of achievement against them at the end of the performance period.

Mr Taylor's personal objectives for the year ended 2011–12 were related to security of venues, building the management team, and growing the business in certain geographies. Payout under this element of the bonus was assessed at 70% of the potential award on personal objectives.

Remuneration committee report continued

Mr Jones' personal objectives for the same period related to development of the Group's management accounting system, improvements in the quality of management information and the integration and monitoring of new businesses. Payout under this element of the bonus was assessed at 70% of the potential award on personal objectives.

Mr Strachan's personal objectives for the same period were related to security of venues and a smooth handover of certain geographic responsibilities. Payout under this element of the bonus was assessed at 91% of the potential award on personal objectives.

Personal objectives have been set for the year ending 30 September 2013 and will be reported in next year's remuneration report in line with recommended best practice.

After taking account of their personal targets, Russell Taylor, Neil Jones and Edward Strachan earned 80%, 80% and 92% of their respective potential bonus awards.

Payments made under the annual bonus are subject to clawback in the event of a fraud or material misstatement of results being identified in relation to the year in which the bonus is earned.

For the financial year commencing 1 October 2012, the Executive Bonus Plan will operate with a similar structure. During the year the Committee reviewed the Executive Director remuneration arrangements, and agreed to increase Neil Jones' maximum annual bonus opportunity for the financial year commencing 1 October 2012 from 90% to 100% of salary in recognition of his sustained strong performance and his value to the business. This is in line with the Committee's aim to gradually increase his aggregate incentive opportunity to market competitive levels over a period of three years.

Edward Strachan's bonus opportunity through the Company's consultancy agreement with Kyzyl Tan has been reduced to 75% of the annual consultancy fee for the period 1 April 2012 to 31 March 2013.

Long-term incentives

In recent years the Company has operated Performance Share Plans and Share Option Schemes as its share‑based arrangements.

Performance Share Plans

The Company has operated the ITE Group plc Employees Performance Share Plan 2004 and the ITE Group plc Key Contractors' Performance Share Plan 2004. Awards can be made to executives and senior management over shares worth up to 100% of base salary each year, and under the latter scheme to key individuals who are not Group employees.

Awards were granted in January 2012 to Russell Taylor and Neil Jones of 100% of salary subject to aggregate three year headline earnings per share targets. Further information regarding these targets can be found on page 58.

Edward Strachan received an award in January 2012 under the ITE Group plc Key Contractors' Performance Share Plan of 100% of the annual fee payable under the consultancy agreement with Kyzyl Tan.

The performance targets were chosen by the Committee to incentivise management to deliver sustained fully diluted headline earnings per share performance over the next three financial years.

For awards anticipated to be granted in January 2013 the performance targets are for aggregated fully diluted headline earnings per share of 57p (for a 30% award) and 64p (for a 100% award) to be earned over the three financial years ending on 30 September 2015. Between 30% and 100% vesting will be calculated on a straight line basis. The targets were calculated as follows:

• – Adjusting the fully diluted earnings per share figure achieved in the financial year ended 30 September 2012 to remove the biennial effect,
• – Applying a compound increase of 5.6% to establish a 'threshold' target for each of the three years,
• – Applying a compound increase of 11.6% to establish a 'full vesting' target for each of the three years,
• – Aggregating the target figures for each year to produce the aggregated fully diluted headline earnings per share targets for threshold vesting (30%) and for maximum vesting (100%).

For the awards to be granted in January 2013 the Committee has decided to help strengthen the incentive effect of the PSP by reducing the sensitivity of results to external uncontrollable factors during the performance period. Accordingly the actual results will be adjusted to reflect 50% of the impact of € : £ exchange rate movements (up or down) from the 2012 base year average.

The Committee reviewed the EPS compound annual growth rates for Threshold and Stretch and agreed a range of 5.6% p.a. to 11.6% p.a. which it considers to be appropriately stretching and achievable (on the basis set out above) over the three year performance period and reflects a reduction in RPI.

The three year performance period of PSP awards granted in January 2010 ended on 30 September 2012. ITE's 3-year cumulative headline EPS of 45.1p warranted 100% vesting of shares to participants.

Shareholding guidelines

Executive Directors are required to retain shares of a value equal to 25% of the after-tax gain made on the vesting of awards under the Plans, until they have built up a shareholding of a value equivalent to at least 100% of annual base salary. Further details of Directors' interests in the ordinary shares of the Company are set out on page 43 of this report.

Share option plans

The Company has operated the ITE Group plc 2009 Discretionary Share Option Scheme. It is not intended that Executive Directors will participate in the 2009 Discretionary Share Option Scheme.

Pensions

The Company offers a stakeholder pension to its employees but currently makes no Company contribution under this scheme.

Since his appointment as Chief Executive Officer in May 2008, the Company makes a contribution equal to 10% of Russell Taylor's base salary to his personal pension scheme. From 1 October 2012, the Company also makes a contribution equal to 5% of Neil Jones' base salary to his personal pension scheme.

Directors' service contracts

Executive Directors

Russell Taylor (Chief Executive) and Neil Jones (Finance Director) have UK contracts of employment which reflect market and best practice for senior management serving in the UK and have no fixed term. Notice periods and base salary details for all Directors are outlined in the tables set out below. Other than the contribution to pension scheme described above, there are no other pension arrangements in place. The standard terms provide for medical insurance and life insurance but provide for no other benefits in kind such as company cars.

In the event of early termination of an Executive Director's contract, it is the Committee's policy that (subject to the provisions of each contract) the amount of compensation (if any) paid to the Executive Director will be determined by reference to the relevant circumstances that prevail at the time. The Committee's objective will be to avoid rewarding poor performance. Furthermore, the Committee will take account of the Executive Director's duty to mitigate their loss.

Edward Strachan also receives a fee as a Director of ITE of £40,000 p.a.

Consistent with market practice, there are no service contracts or other employment arrangements with any of the Executive Directors with fixed terms or notice periods in excess of one year or terms which would expose the Company to compensation payments in excess of one year's total remuneration.

The dates of each contract, the relevant notice period and base salary for 2012-13 are as follows:

Name	Date of contract	Notice period	Base salary 2012–2013	Review dates
Russell Taylor	25 March 2003	12 months	£415,000	February
Neil Jones	3 November 2008	12 months	£243,000	October
Edward Strachan	30 June 2003	6 months	£40,000	October
Edward Strachan through		Fixed term contract
Kyzyl Tan Eurasian Advisors Ltd	28 November 2011	expiring 31 March 2013	£212,000	April

Non-executive Directors

The Chairman is entitled to six months' written notice, and the other Non-executive Directors to one months' written notice, to terminate their Letters of Appointment but no further rights to compensation payments on termination. The effective dates of their Letters of Appointment are as follows: Marco Sodi, 1 February 2012; Michael Hartley, 20 October 2003; Neil England, 18 March 2008 and Linda Jensen, 7 July 2011.

The Non-executive Directors' fees for the year commencing 1 October 2012 are as follows: Michael Hartley £50,000, Neil England £47,500 and for Linda Jensen £42,500. Marco Sodi's fee is £130,000 p.a.

Executive Directors may accept outside appointments with the prior approval of the Board and provided only that these appointments do not prejudice the individual's ability to fulfill their duties at the Company. Whether any related fees are retained by the individual or remitted to the Company will be considered on a case-by-case basis.

Remuneration committee report continued

Performance graph Five-year TSR: ITE Group vs. FTSE 250 Index

FTSE 250 Index. The other points plotted are the values at intervening financial year-ends.

The Committee believes this to be the most appropriate Index to use for this purpose.

Audited information

Aggregate Directors' remuneration The total amounts for Directors' remuneration and other benefits were as follows:

					2012 £000	2011 £000
Emoluments Gains on exercise of share options (see page 57 for details)					1,991 1,383	2,163 581
Total					3,374	2,744
Directors' emoluments		Fees/Basic	Annual	Benefits	2012	2011
Name of Director	Notes	salary £000	bonuses1 £000	in kind £000	total £000	total £000
Executive Russell Taylor Edward Strachan Neil Jones	3	410 276 235	332 224 170	42 21 1	784 521 406	808 710 390
Non-executive Marco Sodi Iain Paterson Michael Hartley Neil England Linda Jensen Malcolm Wall	4 4	74 73 48 45 40 –	– – – – – –	– – – – – –	74 73 48 45 40 –	– 123 44 40 9 39
Aggregate emoluments		1,201	726	64	1,991	2,163

Notes

1. Bonus is based on salary as at 30 September 2012.

2. Contributions to pension schemes are included under 'Benefits in kind'.

3. Edward Strachan earned Director's fees of £38,500 for the year and he is a shareholder of Kyzyl Tan Eurasian Advisors Consultants Limited ('Kyzyl Tan'), which received consultancy fees for services provided to the Group of £237,500 per annum. These amounts are included under 'Fees/basic salary'. Kyzyl Tan earned total performance-related bonuses of £224,340 for the year related to Edward Strachan's annual bonus arrangements for the year. Kyzyl Tan was paid £19,000 in the year to 30 September 2012 for living away from home allowance under the consultancy agreement for the period to 31 March 2012, and £2,000 for private medical insurance in accordance with its consultancy agreement. These amounts are all included in the table above.

4. These Directors served for only part of the year ended 30 September 2012.

Directors' pension

Contributions paid by the Company in respect of Directors' pension:

	2012	2011
	£000	£000
Russell Taylor	41	39

Directors' Interests in performance share plans

Aggregate emoluments disclosed above do not include any amounts for the value of awards under the Company's Performance Share Plans to acquire ordinary shares in the Company granted to or held by the Directors. Details of these are as follows (and targets are outlined on page 58):

Director Scheme	01 Oct 11	Granted during the year	Option price	Exercised during the year	Lapsed during the year	Market price at exercise	date 30 Sep 12	Date of grant	Share price on date of grant	Exercisable from	Exercisable to	Gain on exercise £000
Neil Jones	203,500		1p	203,500	–	£2.05645	–					416
2004	47,5001		1p	–	–	–	47,500	15/06/2009	£1.00	31/12/2013	30/12/2019
Employees'	150,000		1p	–	–	–	150,000	11/02/2010	£1.28	11/02/2013	10/02/2020
Performance	95,000		1p	–	–	–	95,000	11/01/2011	£2.315	11/01/2014	10/01/2021
Share Plan		114,000	1p	–	–	–	114,000	10/01/2012	£2.065	10/01/2015	09/01/2022
Edward	25,342		1p	25,342	–	£2.05645	–					52
Strachan	28,383	–	1p	–	–	–	28,383	11/02/2010	£1.28	11/02/2013	10/02/2020
2004	16,000		1p	–	–	–	16,000	11/01/2011	£2.315	11/01/2014	10/01/2021
Employees' Performance Share Plan		17,961	1p	–	–	–	17,961	10/01/2012	£2.065	10/01/2015	09/01/2022
2004 Key	224,658		1p	224,658	–	£2.05645	–					460
Contractors'	190,0001	–	1p	–	–	–	190,000	15/06/2009	£1.00	31/12/2013	30/12/2019
Performance	251,617	–	1p	–	–	–	251,617	11/02/2010	£1.28	11/02/2013	10/02/2020
Share Plan	148,000	–	1p	–	–	–	148,000	11/01/2011	£2.315	11/01/2014	10/01/2021
		127,039	1p	–	–	–	127,039	10/01/2012	£2.065	10/01/2015	09/01/2022
Russell Taylor	158,027	–	1p	158,027	–	£1.9460	–					306
2004	77,096	–	1p	77,096	–	£1.9460	–					149
Employees'	250,000	–	1p	–	–	–	250,000	20/01/2009	£0.70	20/01/2012	19/01/2019
Performance	190,0001	–	1p	–	–	–	190,000	15/06/2009	£1.00	31/12/2013	30/12/2019
Share Plan	290,000		1p	–	–	–	290,000	11/02/2010	£1.28	11/02/2013	10/02/2020
	164,000	–	1p	–	–	–	164,000	11/01/2011	£2.315	11/01/2014	10/01/2021
		194,000	1p	–	–	–	194,000	10/01/2012	£2.065	10/01/2015	09/01/2022

The award granted to Russell Taylor in 2009 has vested in full.

The market price of the ordinary shares at 30 September 2012 was 206.1p and the range during the year was 157.7p to 240.6p.

Remuneration committee report continued

For the 2004 Employees' and Key Contractors' Performance Share Plans, the performance conditions to be met for the awards are as follows:

Date of grant of awards	Aggregated headline diluted earnings per share1 for three financial years ending	Targets	Percentage of awards that vest	Market price on date of grant
11 February 2010	30 September 2012	Below 32p 32p Between 32p and 37p	Nil 30% Between 30% and 100% calculated on a straight-line basis	128p
11 January 2011	30 September 2013	Below 40p 40p Between 40p and 45p	Nil 30% Between 30% and 100% calculated on a straight-line basis	231.5p
10 January 2012	30 September 2014	Below 53p 53p Between 53p and 59p	Nil 30% Between 30% and 100% calculated on a straight-line basis	206.5p
Financial year commencing 1 October 2012	30 September 2015	Below 57p 57p Between 57p and 64p	Nil 30% Between 30% and 100% calculated on a straight-line basis	No awards have yet been made

1 Headline diluted earnings per share' is calculated using profit before amortisation of acquired intangibles, impairment of goodwill, profits or losses on disposal of Group undertakings, revaluation of financial liabilities in relation to minority put options and direct costs relating to completed acquisitions and disposals.

For the Long-term PSP awards granted in June/August 2009 that are exercisable from 31 December 2013 to 30 December 2019, there are two performance targets applying. Half of the Award is subject to a Performance Target based on the Group's absolute earnings per share during the 2012/13 Financial Year as follows:

EPS for the 2012/2013 Financial Year	Percentage of one half of award that vests
Below 14p	Nil
14p	25%
Between 14p and 17p	Between 25% and 100% calculated on a straight line basis.
17p or more	100%

The other half of the Award is subject to a Performance Target comparing the Company's Total Shareholder Return against the FTSE All-Share Media Sector between 1 June 2009 and 31 December 2013. 25% of this portion of the award vests if ITE is at the median, with full vesting for upper quartile performance. Between median and upper quartile, an award vests on a straight line basis between 25% and 100% based on rankings plus interpolation between intermediate rankings.

The cost of all share awards charged to the profit and loss account for the year ending 30 September 2012 was £2.1 million (2011: £1.7 million).

The ITE share incentive plans operate within a standard 10% in ten year dilution limit. This provision takes account of all potentially dilutive awards made by the Company under any of its share incentive plans. This is because (as with other London Stock Exchange companies) the Company does not operate any form of share incentive on an all employee basis and therefore does not have an internal dilution limit of 5% in ten years for discretionary schemes. The Committee continues to be of the view that this approach, which has been previously agreed with shareholders, remains appropriate and that, therefore, it would be inappropriate to introduce a dilution limit that relates to awards under discretionary/executive schemes only. However, the Committee will keep the dilutive impact of the share incentive schemes under regular view to ensure that the interests of shareholders are taken into account.

The maximum number of additional (i.e. in addition to the existing 4,436,160 in issue) new share issues possible under the ten year dilution limits in the option trust deeds is 20,450,180. Additionally the Employee's Share Trust ('ESOT') can hold up to 5% of the Company's issued share capital against share awards.

On behalf of the Board

Neil England Chairman of the Remuneration Committee 3 December 2012

Independent Auditor's Report to the Members of ITE Group plc

We have audited the group financial statements of ITE Group plc for the year ended 30 September 2012 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Cash Flow Statement, and the related notes 1 to 28. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

• In our opinion the group financial statements:
• – give a true and fair view of the state of the group's affairs as at 30 September 2012 and of its profit for the year then ended;
• – have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• – have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.

Separate opinion in relation to IFRSs as issued by the IASB

As explained in the notes to the group financial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

In our opinion the group financial statements comply with IFRSs as issued by the IASB.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the group financial statements are prepared is consistent with the group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• – certain disclosures of directors' remuneration specified by law are not made; or
• – we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• – the directors' statement, contained within the Finance Directors statement, in relation to going concern;
• – the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and
• – certain elements of the report to shareholders by the Board on directors' remuneration.

Other matter

We have reported separately on the parent company financial statements of ITE Group plc for the year ended 30 September 2012 and on the information in the Directors' Remuneration Report that is described as having been audited.

Alexander Butterworth (Senior Statutory Auditor) for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor London, United Kingdom 3 December 2012

Consolidated Income Statement

For the year ended 30 September 2012

	Notes	2012 £000	2011 £000
Continuing operations Revenue Cost of sales	2, 3	172,312 (94,617)	155,456 (80,595)
Gross profit Other operating income		77,695 371	74,861 292
Administrative expenses before amortisation Amortisation of acquired intangibles Impairment loss	6	(26,550) (13,508) – 259	(24,099) (10,717) (130) (208)
Foreign exchange gain/(loss) on operating activities Total administrative expenses Income from investments & associates	16	(39,799) 701	(35,154) –
Operating profit Investment revenue Finance costs	4 5	38,968 3,193 (1,687)	39,999 582 (1,487)
Profit on ordinary activities before taxation Tax on profit on ordinary activities	6 8	40,474 (7,943)	39,094 (8,292)
Profit for the period		32,531	30,802
Attributable to: Equity holders of the parent Non-controlling interests	24	31,486 1,045	30,724 78
		32,531	30,802
Earnings per share (p) Basic Diluted	10 10	13.0 12.8	12.8 12.6

Consolidated Statement of Comprehensive Income

For the year ended 30 September 2012

	Notes	2012 £000	2011 £000
Profit for the period attributable to shareholders		32,531	30,802
Cash flow hedges:
Movement in fair value of cash flow hedges		4,892	(662)
Fair value of cash flow hedges released to the income statement		923	(1,367)
Currency translation movement on net investment in subsidiary undertakings		(5,214)	(4,162)
		33,132	24,611
Tax relating to components of comprehensive income	8	(1,368)	551
Total comprehensive income for the period		31,764	25,162
Attributable to:
Owners of the company		30,719	25,084
Non-controlling interests	24	1,045	78
		31,764	25,162

Consolidated Statement of Changes in Equity

For the year ended 30 September 2012

		Share
	Share	premium	Merger
	capital	account	reserve
	£000	£000	£000
Balance as at 1 October 2011	2,486	2,724	2,746
Net profit for the year	–	–	–
Currency translation movement on net investment in subsidiary undertakings	–	–	–
Movement in fair value of cash flow hedges	–	–	–
Fair value of cash flow hedges released to the income statement	–	–	–
Tax relating to components of comprehensive income	–	–	–
Total comprehensive income for the period	–	–	–
Dividends paid	–	–	–
Exercise of share options	3	69	–
Share-based payments	–	–	–
Tax charged to equity	–	–	–
Exercise of put option on acquisition of subsidiary	–	–	–
Balance as at 30 September 2012	2,489	2,793	2,746
Balance as at 1 October 2010	2,483	2,698	2,746
Net profit for the year	–	–	–
Currency translation movement on net investment in subsidiary undertakings	–	–	–
Movement in fair value of cash flow hedges	–	–	–
Fair value of cash flow hedges released to the income statement	–	–	–
Tax relating to components of comprehensive income	–	–	–
Total comprehensive income for the period	–	–	–
Put option on acquisitions	–	–	–
Dividends paid	–	–	–
Exercise of share options	3	26	–
Share-based payments	–	–	–
Tax credited to equity	–	–	–
Exercise of put option on acquisition of subsidiary	–	–	–
Balance as at 30 September 2011	2,486	2,724	2,746

Capital								Non
redemption	ESOT	Retained	Put option	Translation	Hedge			controlling	Total
reserve	reserve	earnings	reserve	reserve	reserve		Total	interests	equity
£000	£000	£000	£000	£000	£000		£000	£000	£000
457	(7,826)	87,057	(13,345)	148	(594)		73,853	7,059	80,912
–	–	31,486	–	–		–	31,486	1,045	32,531
–	–	–	–	(5,214)		–	(5,214)	–	(5,214)
–	–	–	–	–	4,892		4,892	–	4,892
–	–	–	–	–	923		923	–	923
–	–	(1,368)	–	–		–	(1,368)	–	(1,368)
–	–	30,118	–	(5,214)	5,815		30,719	1,045	31,764
–	–	(15,220)	–	–		–	(15,220)	(936)	(16,156)
–	2,643	(1,937)	–	–		–	778	–	778
–	–	2,147	–	–		–	2,147	–	2,147
–	–	(1,075)	–	–		–	(1,075)	–	(1,075)
–
	–	93	1,835	–		–	1,928	(472)
457	(5,183)	101,183	(11,510)	(5,066)	5,221		93,130	6,696	1,456 99,826
457	(9,638)	68,318	(1,351)	4,310	1,435		71,458	1,123
–	–	30,724	–	–		–	30,724	78
–	–	–	–	(4,162)		–	(4,162)	–
–	–	–	–	–	(662)		(662)	–
–	–	–	–	–	(1,367)		(1,367)	–
–	–	551	–	–		–	551	–
–	–	31,275	–	(4,162)	(2,029)		25,084	78
–	–	–	(12,856)	–		–	(12,856)	6,554
–	–	(14,105)	–	–		–	(14,105)	–
–	1,812	(106)	–	–		–	1,735	–
–	–	1,696	–	–		–	1,696	–	72,581 30,802 (4,162) (662) (1,367) 551 25,162 (6,302) (14,105) 1,735 1,696
–	–	132	–	–		–	132	–	132 13
– 457	– (7,826)	(153) 87,057	862 (13,345)	– 148	(594)	–	709 73,853	(696) 7,059	80,912

Consolidated Statement of Financial Position

30 September 2012

		2012	2011
	Notes	£000	£000
Non-current assets
Goodwill Other intangible assets	11 13	76,309 54,707	70,684 58,867
Investments	16	–	400
Property, plant and equipment	14	2,346	2,080
Interests in associates	16	596	100
Venue advances and other loans	17	4,011	4,043
Derivative financial instruments Deferred tax asset	21 22	2,139 1,763	79 2,112
		141,871	138,365
Current assets
Trade and other receivables	17	50,320	51,623
Tax prepayment	17	1,377	923
Derivative financial instruments Cash and cash equivalents	21 17	2,128 41,734	221 33,961
		95,559	86,728
Total assets		237,430	225,093
Current liabilities
Bank overdraft	18	(15,418)	(13,948)
Bank loan Trade and other payables	18 19	(13,306) (14,686)	– (19,766)
Deferred income	19	(69,612)	(67,867)
Derivative financial instruments	21	(4,516)	(906)
Provisions	20	(589)	(565)
		(118,127)	(103,052)
Non-current liabilities
Bank loan Provisions	18 20	– (597)	(14,483) (866)
Deferred tax liabilities	22	(14,414)	(13,067)
Derivative financial instruments	21	(4,466)	(12,713)
		(19,477)	(41,129)
Total liabilities		(137,604)	(144,181)
Net assets		99,826	80,912
Equity
Share capital	23	2,489	2,486
Share premium account Merger reserve		2,793 2,746	2,724 2,746
Capital redemption reserve		457	457
ESOT reserve		(5,183)	(7,826)
Retained earnings		101,183	87,057
Translation reserve Hedge reserve		(5,066) 5,221	148 (594)
Put option reserve		(11,510)	(13,345)
Equity attributable to equity holders of the parent		93,130	73,853
Non-controlling interests	24	6,696	7,059
Total equity		99,826	80,912

The notes on page 67 to 98 form an integral part of the consolidated financial statements.

The financial statements of ITE Group plc, registered company number 01927339, were approved by the Board of Directors and authorised for issue on 3 December 2012. They were signed on their behalf by:

Russell Taylor Chief Executive Officer Neil Jones Finance Director 3 December 2012 3 December 2012

Consolidated cash flow statement

For the year ended 30 September 2012

Notes £000 £000 Cash flows from operating activities Operating profit from continuing operations 3 38,968 39,999 Adjustments for non-cash items: Depreciation and amortisation 6 14,621 11,647 Impairment of goodwill 6 – 130 Share-based payments 26 2,147 1,696
Share of associate profit (701) –
(Decrease)/Increase in provisions (245) 172
(Profit)/loss on disposal of plant, property and equipment (23) 35
Foreign exchange (gain)/loss on operating activities 6 (259) 208
Barter sales 3 – (501)
Fair value of cash flow hedges released to the income statement from reserves 923 (1,367)
Movement on cash flow hedges recognised directly in the income statement 107 528
Operating cash flows before movements in working capital 55,538 52,547
Increase in receivables (1,013) (10,589)
Utilisation of venue loans 7,353 7,330
Increase in deferred income 2,578 12,656
(Decrease)/increase in payables (2,374) 3,364
Cash generated from operations 62,082 65,308
Tax paid (11,593) (11,589)
Venue advances and loans (6,215) (6,923)
Net cash from operating activities 44,274 46,796
Investing activities
Interest received 4 951 449
Income from associates 16 655 –
Investment in associates 16 (50) –
Acquisition of businesses – cash paid 12 (18,384) (47,565)
Asset retained by vendor on acquisition of businesses 12 (434) (2,010)
Cash acquired through acquisitions 12 131 3,032
Purchase of property, plant and equipment and computer software (1,883) (1,523) Cash paid to acquire non-controlling interests 12 (739) (763)
Net cash utilised from investing activities (19,753) (48,380) Financing activities
Equity dividends paid (15,205) (14,105)
Minority dividends paid 24 (936) –
Interest paid 5 (1,092) (1,082)
Proceeds from the issue of share capital and exercise of share options 23 778 3
Drawdown of borrowings 293 18,248
Net cash (outflows)/inflows from financing activities (16,162) 3,064

Consolidated cash flow statement continued

For the year ended 30 September 2012

	£000
8,359 33,961 (586) 41,734	1,480 33,163 (682) 33,961
62,082 951 (1,092)	65,308 449 (1,082)
61,941	64,675
61,941 (11,593)	64,693 (11,589) 53,104
	£000 50,348

Net cash reconciliation

	At				At
	1 October		Foreign	Reclassification	30 September
	2011	Cash flow	exchange	to current	2012
	£000	£000	£000	£000	£000
Cash	33,961	8,359	(586)	–	41,734
Debt due within one year	(13,948)	(1,470)	–	(13,306)	(28,724)
Debt due after one year	(14,483)	1,177	–	13,306	–
Net cash	5,530	8,066	(586)	–	13,010

Notes to the consolidated accounts

For the year ended 30 September 2012

1 General information

ITE Group plc is a company incorporated in the United Kingdom. The address of the registered office is given on page 107. The nature of the Group's operations and its principal activities are set out in the Business Review on pages 8 to 31 and in note 3.

These financial statements are presented in pounds Sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the accounting policies set out below.

Impact of new accounting standards

New, revised or changes to existing standards which have been adopted by the Group in the year ending 30 September 2012

The following new standards and interpretations have been adopted in the current year but have not impacted the reported results or the financial position:

• – Amendment to IFRS 1 'Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters';
• – Amendments to IFRS 7 'Financial Instruments: Disclosures';
• – Amendments to IAS 1 'Presentation of Financial Statements';
• – Amendments to IAS 24 'Related Party Disclosures''; and
• – The adoption of these new standards and interpretations has not changed any previously reported figures.

New standards and interpretations not yet adopted

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

• – Amendments to IAS 12, IAS 19, IAS 27, IAS 28 and IFRIC 20;
• – IFRS 9 'Financial Instruments Classification and Measurement';
• – IFRS 10 'Consolidated Financial Statements';
• – IFRS 11 'Joint Arrangements';
• – IFRS 12 'Disclosure of Interests in Other Entities'; and
• – IFRS 13 'Fair Value Measurement'.

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group, except for:

• – IFRS 9 'Financial Instruments' This will introduce a number of changes in the presentation of financial instruments.
• – IFRS 10–13 were issued by the IASB on 12 May 2011 and which are effective for annual periods beginning on or after 1 January 2013. These pronouncements have not yet been endorsed for use in the EU. The Group has not completed its assessment of the impact of pronouncements on the consolidated results, financial position or cash flows of the Group.

2 Basis of accounting

ITE Group plc is a UK listed company and, together with its subsidiary operations, is hereafter referred to as 'the Group'. The Company is required to prepare its consolidated financial statements in accordance with International Financial Reporting Standards ('IFRS') adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation. In addition, the Group has complied with IFRS as issued by the International Accounting Standards Board ('IASB').

The preparation of financial statements under IFRS requires the Directors to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities and income and expenses. These estimates and associated assumptions are based on past experience and other factors considered applicable at the time and are used to make judgements about the carrying value of assets and liabilities that cannot be readily determined from other sources. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Changes to estimates and assumptions are reflected in the financial statements in the period in which they are made.

The financial statements have been prepared on a going concern basis, which assumes that the Company will continue in operational existence for the foreseeable future as disclosed in the Finance Directors' statement on page 36.

The statements are presented in pounds Sterling and have been prepared under IFRS using the historical cost convention, except for the revaluation of financial instruments. The principal accounting policies adopted are set out below.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

2 Basis of accounting continued Basis of consolidation

The Group accounts consolidate the accounts of ITE Group plc and its subsidiary undertakings controlled by the Company drawn up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets is recognised as goodwill. The interest of non-controlling shareholders is stated at the non-controlling interest's proportion of the fair values of assets and liabilities recognised. Subsequently, any losses applicable to the non-controlling interest in excess of the non-controlling interest are allocated against the interests of the parent.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interest in the net assets of consolidated subsidiaries is identified separately from the Group's equity therein. Non-controlling interest consists of the amount of those interests as at the date of the original business combination and the non-controlling interest's share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest in excess of their interest in the subsidiaries equity are allocated against noncontrolling interest even if this results in a deficit balance, except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Any costs attributable to the business combination are expensed directly to the Income Statement. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 (Non-current assets held for sale and discontinued operations), which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

The interest of minority shareholders in the acquiree is initially measured as the non-controlling interest's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying value of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit, pro-rata on the basis of the carrying amount of each asset in the unit.

2 Basis of accounting continued

On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal.

Goodwill on acquisition of a foreign entity is treated as an asset of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill arising on acquisitions before the date of transition to IFRS as Sterling denominated assets.

Intangible assets

Computer software is initially measured at purchase cost. Customer relationships, trademarks and licences and visitor databases are measured at fair value. Computer software, customer relationships, trademarks and licences and visitor databases have a definite useful life and are carried at cost or fair value less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful life. The estimated useful lives are typically between three and ten years for customer relationships, for some trademarks up to 20 years and for visitor databases between five and eight years. Computer software is amortised over four years.

Impairment of assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment is recognised immediately as an expense.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:

Leasehold improvements	– term of lease
Plant and equipment	– four to ten years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, over the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying value amount of the asset and is recognised in income.

Associates

An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

2 Basis of accounting continued

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Investments in associates are carried in the balance sheet at cost as adjusted by post acquisition changes in the Group's share of net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any deficiency of the cost of acquisition below the Group's share of the fair value of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited in profit or loss in the period of acquisition.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case an appropriate provision is made for impairment.

Venue advances

Venue advances arise where the Group has advanced funds to venue owners that can be repaid by either off-setting against future venue hire or by cash repayment. Where the advance can be settled in cash, the loan balance is measured at amortised cost using the 'effective interest rate method' where the impact of discounting is material. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired.

Advances that are prepayments of future venue hire and do not permit the repayment of the principal in cash are recognised at cost as prepayments in venue advances and prepayments.

Provisions

Provisions are recognised when the Group has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are discounted to present value where the effect is material.

Financial Instruments

Classes of financial instruments

The Group aggregates its financial instruments into classes based on their nature and characteristics. The details of financial instruments by class are disclosed in note 21 to the accounts.

Financial assets

The Group classifies its financial assets into the following categories: cash and cash equivalents, loans and receivables and derivative assets at fair value through profit or loss. The classification is determined by management upon initial recognition, and is based on the purpose for which the financial assets were acquired.

Financial assets are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

At each balance sheet date, the Group assesses whether its financial assets are to be impaired. Impairment losses are recognised in the income statement where there is objective evidence of impairment. Financial assets are derecognised (in full or partly) when the Group's rights to cash flows from the respective assets have expired or have been transferred and the Group has neither exposure to the risks inherent in those assets nor entitlement to rewards from them.

Investments

Investments in unlisted shares that are not traded in an active market but that are classified as available-for-sale financial assets and stated at fair value. Fair value is determined in the manner described in note 21. Gains and losses arising from changes in the fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gain and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is reclassified to profit or loss.

Dividends on available for sale equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established.

2 Basis of accounting continued

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and on demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Cash and cash equivalents are measured at initial recognition at fair value. Subsequent to initial recognition cash and cash equivalents are stated at fair value with all realised gains or losses recognised in the income statement.

Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. This category includes the following classes of financial assets: trade and other receivables and venue advances.

Loans and receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The estimates are based on specific credit circumstances and the Group's historical bad receivables experience. No interest is charged on the loans and receivables, due to either their short-term nature or specific arrangements in place, and hence the effective interest rate method is not applied.

Derivative assets

A derivative is a financial instrument that changes its value in response to changes in underlying variable, requires no or little net initial investment and is settled at a future date. Derivative assets are classified as at fair value through profit or loss. Derivative assets are measured at initial recognition at fair value and are subsequently remeasured to their fair value at each balance date with the resulting gains and losses recognised in the income statement. These derivatives are acquired in full compliance with the Group's risk management policies.

Financial liabilities

The Group classifies its financial liabilities into the following categories: written put options, bank borrowings, trade and other payables held at amortised cost and derivative liabilities through profit or loss.

Financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Written put options

Any contract with a single or multiple settlement option that contains an obligation for the Group to purchase equity in a subsidiary for cash gives rise to a financial liability for the present value of the repurchase price. An amount equal to the liability is recorded in equity on initial recognition of a written put option. The liability is subsequently remeasured through the income statement.

Where considered significant, the Group's written put options are discounted to their appropriate value. The unwinding of the discount is charged through the income statement over the period to exercise.

Bank borrowings

Interest-bearing bank loans and overdrafts are recorded at the proceeds received. Finance charges are accounted for on an accruals basis in the income statement and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Where bank loans and overdrafts are deemed to be integral to the Group's cash management activities, they are presented within net cash and cash equivalents in the cash flow statement. Loan and overdraft interest and associated costs that are considered to be financing in nature are presented as financing activities in the cash flow statement.

Trade and other payables

Trade payables are measured at initial recognition at fair value and are subsequently measured at amortised cost. Trade payables are derecognised in full when the Group is discharged from its obligation, it expires, is cancelled or replaced by a new liability with substantially modified terms. Trade and other payables are short-term and there is no interest charged in connection with these, hence the effective interest method is not applied.

Derivative liabilities

A derivative is a financial instrument that changes its value in response to changes in an underlying variable, requires no or little net initial investment and is settled at a future date.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

2 Basis of accounting continued

Derivative liabilities are classified as fair value through profit or loss. Derivative liabilities are measured at initial recognition at fair value and are subsequently remeasured to their fair value at each balance date with the resulting gains and losses recognised in the income statement.

These derivatives are acquired in full compliance with the Group's risk management policies.

Hedge accounting

The Group's activities expose it to the financial risks of changes in foreign currency exchange rates. The Group uses derivative financial instruments such as foreign exchange forward contracts to hedge these exposures.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship. The Group designates its derivative financial instruments as cash flow hedges. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within twelve months. Other derivatives are presented as current assets or current liabilities.

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with the risk management objectives and strategy for undertaking various hedging transactions. At the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in the fair values of cash flows of the hedged item.

Derivative instruments are initially recognised at fair value at the date a derivative contract is entered into and are subsequently measured to their fair value at each balance sheet date. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity.

The gain or loss relating to any ineffective portion is recognised immediately in the income statement, and is included in 'Finance income/cost' in the income statement. Amounts deferred in equity are recycled in the income statement in the periods when the hedged item is recognised in the income statement, in the same line of the income statement as the recognised hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the income statement.

The Group's use of financial derivatives is governed by the Group's financial policies. Further details on these policies can be found in the Business review on pages 32 to 37.

Fair values

The fair value is defined as the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties and is calculated by reference to market rates discounted to current value.

The Group determines the fair value of its financial instruments using market prices for quoted instruments and widely accepted valuation techniques for other instruments.

Valuation techniques include discounted cash flows, standard valuation models based on market parameters, dealer quotes for similar instruments and use of comparable arm's length transactions.

Revenue

Revenue represents the fair value of amounts receivable for goods and services provided in the ordinary course of business net of discounts, VAT and other sales-related taxes.

Revenue is recognised on completion of an event. Billings and cash received in advance, and directly attributable costs relating to future events are deferred. The amounts so deferred are included in the balance sheet as deferred event income and prepaid event costs respectively. Losses anticipated at the balance sheet date are provided in full.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Income from investments is recognised when the shareholders' rights to receive payment have been established.

2 Basis of accounting continued

Barter transactions

Where barter transactions occur between advertising and exhibition space and the revenue can be measured reliably, revenues and costs are recognised in the income statement.

Operating profit

Operating profit is stated after the share of results of associates and profit or loss on disposal of Group undertakings and before investment income and finance costs.

Taxation

The tax expense represents the sum of tax currently payable and deferred tax.

The current tax is based on the taxable profit for the year using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised only to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that does not affect the tax profit or the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except where it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or their contractual rate where applicable. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the rates of exchange prevailing at that date. Non-monetary assets and liabilities are translated at the rate prevailing at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Gains and losses arising on the settlement of monetary items, and on the retranslation of monetary items, are included in income for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in income for the period except for differences arising on the retranslation of non-monetary items in respect of which gains or losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

Details of the Group's accounting policies for forward contracts and options are included in the policy on derivative financial instruments.

On consolidation, the results of overseas operations are translated at the average rates of exchange during the period and their balance sheets at the rates ruling at the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transaction are used. Exchange differences arising are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expense in the period in which the operation is disposed of.

Under the exemption permitted from IAS 21 (the effects of changes in foreign exchange rates), cumulative translation differences for all foreign operations prior to 1 October 2004 have been treated as zero. Consequently, any gain or loss on disposal will exclude translation differences that arose prior to 1 October 2004.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

2 Basis of accounting continued

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Employee Share Trust

The financial statements include the assets and liabilities of the Employee Share Trust ('ESOT'). Shares in the Company held by the ESOT have been valued at cost and are held in equity. The costs of administration of the ESOT are written off to profit or loss as incurred.

Where such shares are subsequently sold, any net consideration received is included in equity attributable to the Company's equity holders.

Share-based payments

The Group has applied IFRS 2 (share-based payment). IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

The Group issues equity-settled share-based payments to certain employees. These are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Fair value is measured using a Black-Scholes model. The expected life used in the model has been adjusted, for the effects of non-transferability, exercise restrictions and behavioural considerations based on management's best estimate.

Leases

Rentals payable under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received as an incentive to enter into an operating lease are also spread on a straightline basis over the lease term.

Critical accounting judgments and key sources of estimation uncertainty

In the process of applying the Group's accounting policies, the following judgments and assumptions have been made by management and have the most significant effect on the amounts recognised in the financial statements or have the most risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Impairment of goodwill and intangible assets

Determining whether goodwill and intangible assets are impaired requires an estimation of the value in use of cashgenerating units to which goodwill or intangible assets have been allocated. The value in use calculation requires an estimation of future cash flows expected from the cash-generating unit to perpetuity and a suitable discount rate in order to calculate present value. The period used in the calculation is based on management's average expectation of the period over which the value will be derived from the cash-generating units. The carrying value of goodwill and intangible assets at 30 September 2012 is £76.3 million and £54.7 million respectively.

Acquired intangible assets

The valuation of acquired intangible assets requires management to estimate the net present value of the additional future cash flows arising from customer relationships, trademarks and licences and visitor databases to determine the value of those intangible assets. This involves estimating the period over which these intangible assets affect future cash flows.

Intangible asset useful economic lives

The life of an intangible asset is estimated by management based on the expected period over which cash flows generated from that asset will arise. The amortisation charge reflected in the financial statements is directly impacted by the estimation of useful lives by Management.

Share-based payments

The Group makes share-based payments to certain employees. These payments are measured at their estimated fair value at the date of grant, calculated using an appropriate option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of the number of shares that will eventually vest. The key assumptions used in calculating the fair value of the options are the discount rate, the Group's share price volatility, dividend yield, risk free rate of return, and expected option lives. Management regularly performs a true-up of the estimate of the number of shares that are expected to vest; this is dependent on the anticipated number of leavers.

2 Basis of accounting continued

Taxation

Being a multinational Group with tax affairs in many geographic locations inherently leads to a tax structure which makes the degree of estimation and judgement more challenging. The resolution of issues is not always within the control of the Group and is often dependent on the efficiency of legal processes. Such issues can take several years to resolve. The Group takes a considered view of unresolved issues, however the inherent uncertainty regarding these items means that the eventual resolution could differ significantly from the accounting estimates and therefore impact the Group's results and future cash flows.

3 Segmental information

IFRS 8 introduces the term Chief Operating Decision Maker ('CODM'). The Senior Management Board comprising the Executive Directors (Russell Taylor (Chief Executive Officer), Neil Jones (Financial Director), Edward Strachan (Executive Director)), Stephen Keen, Alexander Shtalenkov, Andy Braid, Colette Tebbutt and Suzanne King is considered to be the CODM.

ITE's reportable segments are strategic business units that are based in different geographic locations, predominantly in the developing and emerging markets. Each business unit is managed separately and has a different marketing strategy as determined by the local management. The products and services offered by each business unit are identical across the Group.

ITE Group evaluates performance on the basis of profit or loss from operations before tax expense not including non‑recurring gains and losses and foreign exchange gains and losses.

The revenue and profit before taxation are attributable to the Group's one principal activity, the organisation of trade exhibitions, conferences and related activities and can be analysed by geographic segment as follows.

Year ended 30 September 2012	UK & Western Europe £000	Central Asia & Caucasus £000	Russia £000	Eastern & Southern Europe £000	Rest of World £000	Total Group £000
By geographical location of events/activities Revenue Headline pre-tax profit Operating profit	9,562 (7,412) (20,525)	27,030 8,908 8,969	105,163 42,240 42,172	28,417 9,086 8,325	2,140 181 27	172,312 53,003 38,968
By origin of sale Revenue Headline pre-tax profit	53,331 9,141	15,168 3,612	76,227 30,840	25,017 8,440	2,569 970	172,312 53,003
Operating profit	9,481	3,524	22,918	2,519	526	38,968
Operating profit Investment revenue Finance costs						38,968 3,193 (1,687)
Profit before tax Tax						40,474 (7,943)
Profit after tax						32,531
Capital expenditure Depreciation and amortisation Balance Sheet	330 514	374 384	1,098 8,203	153 5,198	127 322	2,082 14,621
Assets1	60,470	11,685	92,515	63,095	6,525	234,290
Liabilities1	(49,404)	(5,639)	(45,208)	(20,533)	(845)	(121,629)
Non-current Assets2	12,492	4,913	57,140	53,513	5,901	133,959

1 Segment assets and segment liabilities exclude current and deferred tax assets and liabilities.

2 Included in non-current assets are all non-current assets other than venue advances and other loans, deferred tax assets and financial instruments.

The revenue in the year of £172.3 million includes £0.5 million (2011: £0.5 million) of barter sales.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

3 Segmental information continued

Year ended 30 September 2011	UK & Western Europe £000	Central Asia & Caucasus £000	Russia £000	Eastern & Southern Europe £000	Rest of World £000	Total Group £000
By geographical location of events/activities Revenue Headline pre-tax profit Operating profit	8,950 (6,933) (17,975)	21,853 7,805 7,852	105,650 47,424 47,320	17,940 4,360 4,042	1,063 (1,281) (1,240)	155,456 51,375 39,999
By origin of sale Revenue Headline pre-tax profit Operating profit	56,841 13,407 12,919	10,998 3,524 3,562	71,594 32,346 25,831	15,981 2,863 (1,324)	42 (765) (989)	155,456 51,375 39,999
Operating profit Investment revenue Finance costs						39,999 582 (1,487)
Profit before tax Tax						39,094 (8,292)
Profit after tax						30,802
Capital expenditure Depreciation and amortisation Balance Sheet	456 586	117 176	680 6,612	21 4,002	– 271	1,274 11,647
Assets1	66,006	13,061	99,078	41,138	2,774	222,057
Liabilities1	(48,360)	(5,718)	(51,786)	(20,804)	(1,603)	(128,271)
Non-current Assets2	20,715	8,022	65,630	35,635	2,129	132,131

1 Segment assets and segment liabilities exclude current and deferred tax assets and liabilities.

2 Included in non-current assets are all non-current assets other than venue advances and other loans, deferred tax assets and financial instruments.

4 Investment revenue

	2012 £000	2011 £000
Interest receivable from bank deposits	951	437
Interest receivable from Inland Revenue repayments	–	12
Gain on revaluation of equity options	1,641	–
Gain on cash flow hedges	148	14
Gain on settlement of contingent consideration	453	119
	3,193	582
5 Finance costs	2012 £000	2011 £000
Interest on overdrafts	660	741
Bank charges	426	341
Loss on exercise of Ekin Fuar put option	93	269
Loss on settlement of contingent consideration	–	104
Interest payable to Inland Revenue	6	–
Loss on cash flow hedges	42	32
Imputed interest charge on discounted put option liabilities	460	–

1,687 1,487

6 Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging/(crediting):

	2012 £000	2011 £000
Staff costs (note 7)	31,764	29,115
Depreciation of property, plant and equipment (note 14)	1,113	633
Amortisation of intangible assets (note 13)	13,508	11,014
Impairment of goodwill	–	130
(Profit)/loss on sale of property, plant and equipment	(23)	35
Operating lease rentals – other (note 25)	2,304	3,623
(Gain)/loss on derivative financial instruments – cash flow hedges (notes 4 and 5)	(106)	18
(Gain)/loss on derivative financial instruments – put options (notes 4 and 5)	(1,641)	269
Foreign exchange (gain)/loss on operating activities	(259)	208

Auditors' remuneration

	2012 £000	2011 £000
Fees payable to the Company's auditor for the audit of the Company's annual accounts Fees payable to the Company's auditor and its associates for other services:	240	207
– The audit of the Company's subsidiaries pursuant to legislation	75	73
– Other services pursuant to legislation (Interim review)	34	34
– Other services1	25	75
Tax services	9	–
	383	389

1 Other services related to risk assurance reporting (2011: due diligence).

Reconciliation of headline pre-tax profit to profit on ordinary activities before taxation

	2012 £000	2011 £000
Profit on ordinary activities before taxation	40,474	39,094
Amortisation of acquired intangibles	13,508	10,717
Loss on exercise of Ekin Fuar put option	93	269
Gain on revaluation of put option liabilities	(1,641)	–
Unwind of discount of put option liabilities	460	–
(Profit) on sale of investments	(78)	–
Gain on settlement of contingent consideration	(453)	(119)
Loss on settlement of contingent consideration	–	104
Transaction costs (completed and pending)	640	1,180
Impairment of goodwill	–	130
Headline pre-tax profit	53,003	51,375

7 Staff costs	2012 Number	2011 Number
The average monthly number of employees (including Directors) was: Administration Technical and sales	386 658	309 625
	1,044	934

Their aggregate remuneration comprised:

	£000	£000
Wages and salaries	25,210	23,697
Social security costs	4,337	3,683
Other pension costs	70	39
Share-based payments	2,147	1,696
	31,764	29,115

Details of audited Directors' remuneration are shown in the Report on remuneration on pages 52 to 58.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

8 Tax on profit on ordinary activities

Analysis of tax charge for the year:

	2012	2011
	£000	£000
Group taxation on current year profit
UK corporation tax on profit for the year	923	3,294
Adjustment to UK tax in respect of previous years	(603)	(768)
	320	2,526
Overseas taxation – current year	9,335	8,569
Overseas taxation – previous years	422	(442)
	9,757	8,127
Current tax	10,077	10,653
Deferred tax
Origination and reversal of timing differences:
Current year	(2,134)	(2,362)
Prior year	–	1
	7,943	8,292

The tax charge for the year can be reconciled to the profit per the income statement as follows:

	2012 £000	2011 £000
Profit on ordinary activities before tax	40,474	39,094
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2011: 27%) Effects of:	10,119	10,555
Expenses not deductible for tax purposes	1,388	963
Deferred tax assets (recognised)/not recognised	(76)	39
Withholding tax and other irrecoverable taxes	526	333
Adjustments to tax charge in respect of previous years	(131)	(1,210)
Deferred tax provision in respect of proposed dividends from overseas subsidiaries	200	13
Effect of different tax rates of subsidiaries operating in other jurisdictions	(4,047)	(2,401)
Associate tax	(36)	–
	7,943	8,292
	2012	2011
	£000	£000
Tax relating to components of comprehensive income:
Cash flow gains/(losses) – current	(230)	225
Cash flow gains/(losses) – deferred	(1,138)	326
	(1,368)	551
Tax relating to amounts credited/(charged) to equity:
Share options – current	364	127
Share options – deferred	(49)	5
Goodwill on historic acquisition – deferred	(1,390)	–
	(1,075)	132
	(2,443)	683

During the year the Group recognised directly in equity a deferred tax liability relating to the goodwill arising on an historic acquisition. This deferred tax liability had not been recognised on transition to IFRS in 2005.

9 Dividends

	2012 £000	2011 £000
Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 30 September 2011 of 4.2p (2010: 4.0p) per ordinary share Interim dividend for the year ended 30 September 2012 of 2.1p (2011: 1.9p) per ordinary share	10,109 5,111	9,537 4,568
	15,220	14,105
Proposed final dividend for the year ended 30 September 2012 of 4.4p (2011: 4.2p) per ordinary share	10,714	10,100

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Under the terms of the trust deed dated 20 October 1998, the ITE Group Employees Share Trust, which holds 5,366,722 (2011: 8,102,687) ordinary shares representing 2.2% of the Company's called up ordinary share capital, has agreed to waive all dividends due to it each year.

10 Earnings per share

The calculation of basic, diluted and headline diluted earnings per share is based on the following earnings and the numbers of shares:

	2012 Number of shares (000)	2011 Number of shares (000)
Weighted average number of shares: For basic earnings per share Effect of dilutive potential ordinary shares	242,124 3,040	239,635 5,132
For diluted and headline diluted earnings per share	245,164	244,767

Basic and diluted earnings per share

The calculations of basic and diluted earnings per share are based on the profit for the financial year attributable to equity holders of the parent of £31.5 million (2011: £30.7 million). Basic and diluted earnings per share were 13.0p and 12.8p respectively (2011: 12.8p and 12.6p respectively).

Headline diluted earnings per share

Headline diluted earnings per share is intended to provide a consistent measure of Group earnings on a year-on-year basis and is 16.9p per share (2011: 16.6p). Headline basic earnings per share is 17.1 per share (2011: 17.0p).

	2012 £000	2011 £000
Profit for the financial year attributable to equity holders of the parent	31,486	30,724
Amortisation of acquired intangible assets	13,508	10,717
Tax effect of amortisation of acquired intangible assets	(2,651)	(2,358)
Gain on revaluation of equity options	(1,641)	–
Unwind of discount of put option liabilities	460	–
Profit and loss on sale of investments	(78)	–
Transaction costs	640	1,180
Loss on exercise of Ekin Fuar put option	93	269
Loss on settlement of contingent consideration	–	104
Gain on settlement of contingent consideration	(453)	(119)
Impairment of goodwill	–	130
Tax effect of other adjustments	15	(27)
Headline earnings for the financial year after taxation	41,379	40,620

Notes to the consolidated accounts continued

For the year ended 30 September 2012

11 Goodwill

Group	Goodwill £000
Cost At 1 October 2010 Additions through business combinations Foreign exchange	50,584 22,389 (2,159)
At 1 October 2011 Additions through business combinations Foreign exchange	70,814 7,295 (1,670)
At 30 September 2012	76,439
Provision for impairment At 1 October 2010 Impairment	– (130)
At 1 October 2011 Impairment	(130) –
At 30 September 2012 Net book value At 30 September 2012	(130) 76,309
At 30 September 2011	70,684

12 Goodwill acquired through business combinations

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units that are expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:

	2012	2011
	£000	£000
UK and Western Europe	7,692	14,920
Central Asia and Caucasus	6,680	7,583
Russia	41,446	37,505
Eastern and Southern Europe	18,296	9,505
Rest of the World	2,195	1,171
	76,309	70,684

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the cash-generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to cash flows during the period. Management estimates discount rates that reflect the current market assessments of the time value of money and risks specific to the cash-generating units. The growth rates are based on management forecasts. The Group prepares cash flow forecasts based upon the most recent financial plans approved by the Board and extrapolates the planned cash flows. Assumed growth rates based on GDP growth rates in the local markets and management judgements have been applied for the first three years beyond the detailed plans and a rate of between 1% and 8% is applied thereafter. These rates do not exceed the average long-term growth rate for the businesses in the relevant markets.

The pre-tax discount rates applied to the cash-generating units are between 15% and 18%.

The calculation of value in use is most sensitive to the discount rate and growth rates used. Management believes that no reasonable potential change in any of the above key assumptions would cause the carrying value to exceed its recoverable amount.

The Group has conducted a sensitivity analysis taking into consideration the impact on key impairment test assumptions arising from a range of possible trading and economic scenarios. The scenarios have been performed separately for each Cash Generating Unit with the sensitivities summarised as follows:

• – An increase in the discount rate by 1%.
• – A decrease of 5% on forecast cash flows over the term for all Cash Generating Units.

The sensitivity analysis shows that no impairment would result from either an increase in the discount rate or a decrease in forecast cash flows.

12 Goodwill acquired through business combinations continued

The principal acquisitions made during the year to 30 September 2012, accounted for under the acquisition method, were:

Name of entity acquired	Nature of entity acquired	Date of acquisition	Percentage acquired
Assets of Autoexpo	Portfolio of ten exhibitions	2 December 2011	100%
Expo.KZ LLP	Portfolio of trade events	10 February 2012	100%
Beautex Co LLC	Exhibition organiser	3 April 2012	100%
Assets of Unitech	Portfolio of two exhibitions	2 May 2012	100%
Assets of Conventions & Fairs	Portfolio of six exhibitions	24 May 2012	100%
Jacket Required Limited	Exhibition organiser	13 July 2012	100%

Details of the aggregate net assets acquired as adjusted from book to fair value, and the attributable goodwill are presented as follows:

Acquisition of 100% of Autoexpo assets

	Book value £000	Adjustments £000	Fair value £000
Net assets acquired
Tangible fixed assets	31	–	31
Intangible fixed assets – trademarks	–	1,679	1,679
Intangible fixed assets – customer relationships	–	1,340	1,340
Trade and other receivables	–	–	–
Cash and cash equivalents	–	–	–
Trade and other payables	–	–	–
Deferred tax liability	–	–	–
Net assets acquired	31	3,019	3,050
Goodwill arising on acquisition			1,466
Total cost of acquisition			4,516
Satisfied by:
Net cash paid			4,516
			4,516
Net cash outflow arising on acquisition:
Net cash paid			4,516
Cash and cash equivalents acquired			–
			4,516

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within twelve months of the acquisition date.

The goodwill arising on acquisition of £1.5 million represents the perceived value placed by the Group of having an established operating position in a new emerging market. The acquired business organises exhibitions in Kiev, predominantly in ITE's core market sectors of travel & tourism, building & construction, and oil & gas.

The goodwill and intangible assets are expected to qualify for tax deductions in Ukraine. No deferred tax liabilities arise in relation to the acquired intangible assets. Transaction costs relating to the above acquisition were £0.2 million.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

12 Goodwill acquired through business combinations continued

The acquired business contributed £1.0 million to Group revenue and £0.1 million to profit before tax during the year. If the acquisition had occurred on 1 October 2011, the acquired business would have contributed £1.7 million to Group revenue and £0.3 million to profit before tax.

Acquisition of 100% of Beautex Co LLC

	Book value £000	Adjustments £000	Fair value £000
Net assets acquired
Intangible fixed assets – trademarks	–	1,525	1,525
Intangible fixed assets – customer relationships	–	2,709	2,709
Trade and other receivables	–	–	–
Cash and cash equivalents	–	–	–
Trade and other payables	–	–	–
Deferred tax liability	–	(1,059)	(1,059)
Net assets acquired	–	3,175	3,175
Goodwill arising on acquisition			3,919
Total cost of acquisition			7,094
Satisfied by:
Net cash paid			4,562
Asset retained by vendor			434
Deferred consideration			2,098
			7,094
Net cash outflow arising on acquisition:
Net cash paid			4,562
Asset retained by vendor			434
Cash and cash equivalents acquired			–
			4,996

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within twelve months of the acquisition date. The goodwill arising on acquisition of £3.9 million represents significant expected synergies with other operations of the Group. The acquired business organises exhibitions in Kiev predominantly in the beauty and cosmetics sectors.

No recognised goodwill is expected to be deductible for income tax purposes. Transaction costs relating to the above acquisition were £0.1 million.

The acquired business contributed £2.0 million to Group revenue and £0.9 million to profit before tax during the year. The contribution would be unchanged if the business had been acquired on 1 October 2011.

12 Goodwill acquired through business combinations continued Acquisition of 100% of Unitech assets

	Book value £000	Adjustments £000	Fair value £000
Net assets acquired
Intangible fixed assets – trademarks	–	330	330
Intangible fixed assets – customer relationships	–	629	629
Trade and other receivables	–	–	–
Cash and cash equivalents	–	–	–
Trade and other payables	–	–	–
Deferred tax liability	–	–	–
Net assets acquired	–	959	959
Goodwill arising on acquisition			367
Total cost of acquisition			1,326
Satisfied by:
Net cash paid			1,326
			1,326
Net cash outflow arising on acquisition:
Net cash paid			1,326
Cash and cash equivalents acquired			–
			1,326

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within twelve months of the acquisition date.

The goodwill arising on acquisition of £0.4 million represents the perceived value placed by the Group of having an established operating position in a new emerging market. The acquired business organises exhibitions in Mumbai and Chennai, predominantly in ITE's core market sectors of building & construction.

The goodwill and intangible assets are expected to qualify for tax deductions in India. No deferred tax liabilities arise in relation to the acquired intangible assets. Transaction costs relating to the above acquisition were £0.1 million.

The acquired business contributed £0.1 million to Group revenue and £0.1 million to profit before tax during the year. If the acquisition had occurred on 1 October 2011, the acquired business would have contributed £0.3 million to Group revenue and £0.2 million to profit before tax.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

12 Goodwill acquired through business combinations continued Acquisition of 100% of Convention & Fairs assets

	Book value £000	Adjustments £000	Fair value £000
Net assets acquired
Intangible fixed assets – trademarks	–	321	321
Intangible fixed assets – customer relationships	–	234	234
Trade and other receivables	–	–	–
Cash and cash equivalents	–	–	–
Trade and other payables	–	–	–
Deferred tax liability	–	–	–
Net assets acquired	–	555	555
Goodwill arising on acquisition			683
Total cost of acquisition			1,238
Satisfied by:
Net cash paid			1,238
			1,238
Net cash outflow arising on acquisition:
Net cash paid			1,238
Cash and cash equivalents acquired			–
			1,238

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within twelve months of the acquisition date.

The goodwill arising on acquisition of £0.7 million represents the perceived value placed by the Group of having an established operating position in a new emerging market. The acquired business organises exhibitions across India, predominantly in ITE's core market sectors of building & construction.

The goodwill and intangible assets are expected to qualify for tax deductions in India. No deferred tax liabilities arise in relation to the acquired intangible assets. Transaction costs relating to the above acquisition were £0.1 million.

The acquired business contributed £0.1 million to Group revenue and £0.1 million to profit before tax during the year. If the acquisition had occurred on 1 October 2011, the acquired business would have contributed £0.6 million to Group revenue and £0.2 million to profit before tax.

Acquisition of 100% of Jacket Required Limited

	Book value £000	Adjustments £000	Fair value £000
Net assets acquired
Intangible fixed assets – trademarks	–	425	425
Intangible fixed assets – customer relationships	–	149	149
Trade and other receivables	211	–	211
Cash and cash equivalents	131	–	131
Trade and other payables	(302)	–	(302)
Deferred tax liability	–	(149)	(149)
Net assets acquired	40	425	465
Goodwill arising on acquisition			614
Total cost of acquisition			1,079
Satisfied by:
Net cash paid			599
Contingent consideration			480
			1,079
Net cash outflow arising on acquisition:
Net cash paid			599
Cash and cash equivalents acquired			(131)
			468

12 Goodwill acquired through business combinations continued

The values used in accounting for the identifiable assets and liabilities of these acquisitions are provisional in nature at the balance sheet date. If necessary, adjustments will be made to these carrying values and the related goodwill, within twelve months of the acquisition date. The goodwill arising on acquisition of £0.6 million represents significant expected synergies with other operations of the Group. The acquired business organises exhibitions in the United Kingdom, predominantly in the fashion sector.

No recognised goodwill is expected to be deductible for income tax purposes. Transaction costs relating to the above acquisition were £0.1 million.

The acquired business contributed £0.2 million to Group revenue and £0.1 million to profit before tax during the year. If the acquisition had occurred on 1 October 2011, the acquired business would have contributed £0.4 million to Group revenue and £0.2 million to profit before tax.

Contingent consideration will be based on a multiple of the results of Jacket Required for the years ended 31 May 2013 and 31 May 2014. The payment will be made in two stages with the final payment expected to be paid by 31 July 2014. The Group's best estimate at date of acquisition was £0.5 million. The contingent consideration is based on show profits and is unlimited.

The fair value of the acquired receivables is equivalent to the gross contractual receivable and estimated future cash flows arising.

Other acquisitions

On 10 February 2012 the Group acquired 100% of the share capital of Expo.KZ LLP for consideration of \$650,000 (£410,000), some of which was paid in April 2012. The assets acquired comprise a small number of trade events in Kazakhstan. No goodwill arose on the acquisition of Expo.KZ LLP.

During the year the Group updated its provisional acquisition accounting on Yem Fuar to account for pre-acquisition liabilities not previously identified. This resulted in an increase in goodwill of £0.3 million.

On 7 August 2012, Newex Marketing Limited, a subsidiary of the Group purchased a further 12.5% of the share capital of Ekin for \$1.15 million (£739,000), taking the Group's shareholding to 100%. This transaction has resulted in a decrease in the Group's non-controlling interest in Ekin as can be seen in note 24.

13 Other intangible assets

	Customer relationships £000	Trademarks and licences £000	Visitor databases £000	Computer software £000	Total £000
Cost
As at 1 October 2010	44,406	–	–	2,262	46,668
Additions through business combinations	24,282	17,314	772	–	42,368
Additions	–	249	–	359	608
Foreign exchange Disposals	(1,259) –	(601) –	(29) –	– (338)	(1,889) (338)
As at 1 October 2011	67,429	16,962	743	2,283	87,417
Additions through business combinations	5,061	4,690	–	–	9,751
Additions	–	101	-	559	660
Foreign exchange	(943)	(90)	(30)	–	(1,063)
Disposals	–	–	–	–	–
As at 30 September 2012	71,547	21,663	713	2,842	96,765
Amortisation
As at 1 October 2010	16,066	–	–	1,773	17,839
Charge for the year	8,858	1,837	22	297	11,014
Disposals	–	–	–	(303)	(303)
As at 1 October 2011	24,924	1,837	22	1,767	28,550
Charge for the year	10,241	2,962	82	223	13,508
Disposals	–	–	–	–	–
As at 30 September 2012	35,165	4,799	104	1,990	42,058
Net book value
As at 30 September 2012	36,382	16,864	609	852	54,707
As at 30 September 2011	42,505	15,125	721	516	58,867

The amortisation period for customer relationships is between three and ten years, for trademarks up to 20 years and for visitor databases between five and eight years. Computer software is amortised over four years.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

13 Other intangible assets continued

The additions to customer relationships and trademarks and licences through business combinations of £9.8 million relate to the purchase of Autoexpo, Beautex Co LLC, Unitech, Conventions & Fairs and Jacket Required. The carrying amounts of these intangibles at 30 September 2012 were £3.3 million, £3.7 million, £0.9 million, £0.6 million and £0.5 million respectively. The intangibles acquired during the year are amortised in accordance with the Group amortisation policy for intangibles as detailed above.

14 Property, plant and equipment

Cost	Leasehold land and buildings £000	Plant and equipment £000	Total £000
At 1 October 2010 Additions Additions through business combinations Disposals	1,147 22 – –	3,408 893 45 (237)	4,555 915 45 (237)
At 1 October 2011 Additions Additions through business combinations Disposals	1,169 549 – (294)	4,109 1,533 31 (1,132)	5,278 2,082 31 (1,426)
At 30 September 2012	1,424	4,541	5,965
Depreciation At 1 October 2010 Charge for the year Disposals Foreign exchange	658 78 – –	2,156 555 (237) (12)	2,814 633 (237) (12)
At 1 October 2011 Charge for the year Disposals Foreign exchange	736 166 (48) –	2,462 947 (644) –	3,198 1,113 (692) –
At 30 September 2012	854	2,765	3,619
Net book value At 30 September 2012	570	1,776	2,346
At 30 September 2011	433	1,647	2,080

15 Subsidiaries

A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 5 to the Company's separate financial statements.

16 Interests in associates

	2012 £000
Aggregated amounts relating to associates
Total assets	125
Total liabilities	(101)
	24
Share of revenue	1,618

16 Interests in associates

Included within total assets is goodwill of £nil (2011: £nil).

At 30 September 2012	196	400	596
Additional investment	50	–	50
Dividends received	(100)	(555)	(655)
Share of results of associate	146	555	701
Reclassified to interests in associates	–	400	400
At 1 October 2011	100	–	100
	Scoop £000	Summit £000	Total £000

On 12 September 2011, the Group purchased 40% of Scoop International Fashion Limited for £100,000. This has been accounted for using the equity method, recognised initially at cost. The carrying amount is increased or decreased to recognise the ITE's share of the profit or loss of the associate after the date of acquisition. ITE's share of the profit or loss of the associate is recognised in the income statement. Distributions received from the associate also reduce the carrying amount of the investment. The Group has written a put option over the remaining 60% of Scoop International Fashion Limited.

On 8 February 2011, the Group purchased a 10% share in Summit Trade Events Limited for £400,000. During the year the Group reviewed the accounting treatment for its investment in Summit Trade Events Limited and determined that it had significant influence through a seat on the Board. As a result, the investment has been reclassified from investments to interests in associates and is accounted for using the equity method. The carrying amount is increased or decreased to recognise the ITE's share of the profit or loss of the associate after the date of acquisition. ITE's share of the profit or loss of the associate is recognised in the income statement. Distributions received from the associate also reduce the carrying amount of the investment. The Group has written put and call options over the remaining 90% of Summit Trade Events Limited.

17 Current assets and non-current assets

	2012 £000	2011 £000
Trade and other receivables
Trade receivables Other receivables	36,659 1,972	35,299 2,272
Venue advances and prepayments Prepayments and accrued income	4,913 6,776	6,015 8,037
	50,320	51,623
Taxation prepayments
Taxation prepayments	1,377	923

Taxation prepayments relate to overseas subsidiaries and are available for offset against future tax liabilities.

Cash and cash equivalents

	2012	2011
	£000	£000
Cash at bank and in hand	41,734	33,961
Venue advances and other loans – non-current
Venue advances and other loans – non-current	4,011	4,043

The cash at bank and in hand comprises cash held by the Group and short-term deposits with an original maturity of three months or less. The carrying value of these assets approximates their fair value. The cash balance is represented by £9.1 million of Sterling, £10.4 million of Euros, £4.0 million of US Dollars, £7.6 million of Rubles and £10.6 million of other currencies. Surplus funds are placed on short-term deposit with floating interest rates.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

17 Current assets and non-current assets continued

The venue advances and other loans of £4.0 million due after one year are all due within five years (2011: £4.0 million due after more than five years). The venue loans repayable by cash are measured at fair value. The venue prepayments are held at cost. All venue advances are stated net of allowance for doubtful receivables. The venue advances are denominated primarily in either Euros or US Dollars and are analysed as follows:

	2012 £000	2011 £000
Venue loans
Denominated in US Dollars	1,357	2,049
Denominated in other currencies	2,187	818
	3,544	2,867
Venue prepayments
Denominated in Euros	3,402	5,640
Denominated in US Dollars	930	1,194
Denominated in other currencies	1,078	357
	5,410	7,191
Total venue loans and prepayments	8,954	10,058

18 Bank borrowings Bank overdraft

The bank overdrafts are all repayable on demand. Of the total overdraft, £13.3 million (2011: £nil) is denominated in Sterling, £2.1 million (2011: £2.4 million) is denominated in US Dollars, and £nil (2011: £11.5 million) is denominated in Euros. The Euro and US Dollar overdraft are taken out to act as a partial hedge against UK monetary assets in those currencies. The overdrafts have been secured by a guarantee between a number of Group companies. The Directors estimate the carrying value of the overdrafts approximates their fair value. At 30 September 2012 the Group had £nil (2011: £2.1 million) of gross undrawn committed overdraft facilities. Following a refinancing of the Group's loan facilities on 19 November 2012, the Group's overdraft facilities were increased by £5 million to £20 million.

The borrowings are arranged at floating interest rates, thus exposing the Group to interest rate risk. During the year ended 30 September 2012 the overdrafts attracted interest at the base rate plus a margin of 2.0%. The average interest rate on the bank overdrafts approximated 2.1% throughout the year (2011: 2.5%). Following the refinancing of the Group's loan facilities on 19 November 2012, the margin on the overdraft was reduced to 1.75%.

Bank loan

During the year ended 30 September 2012 the Group utilised a £15.0 million (2011: £15.0 million) multi-currency committed bank facility that provided revolving credit facilities through to 30 November 2012. Drawdowns bear interest at interbank rates of interest plus a margin of 2.5%. A number of Group companies acted as guarantors to this facility. At 30 September 2012 the Group had £1.7 million (2011: £0.5 million) of gross undrawn committed loan facility.

On 19 November 2012 the Group refinanced its loan obligations under the existing facility. The revised facility is a £10.0 million multi-currency committed bank facility that provides revolving credit facilities through to 1 July 2015. Drawdowns bear interest at interbank rates of interest plus a margin of 2.0%. A number of Group companies continue to act as guarantors to this facility.

19 Trade and other payables

	2012	2011
	£000	£000
Trade payables	1,604	879
Taxation and social security	1,650	3,169
Other payables	2,339	3,104
Accruals	8,232	8,475
Deferred consideration	381	–
Contingent consideration	480	4,139
	14,686	19,766
Deferred income	69,612	67,867

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Directors consider that the carrying value of trade payables approximates their fair value.

20 Provisions

	National
	Insurance
	on share
	options	Leases	Total
	£000	£000	£000
At 1 October 2011	1,024	407	1,431
Charged/(credited) to income statement	303	(28)	275
Utilised in the period	(520)	–	(520)
At 30 September 2012	807	379	1,186
Included in current liabilities			589
Included in non-current liabilities			597
			1,186

National Insurance on share options is calculated by reference to the employer's National Insurance cost on the potential gain based on the difference between the exercise price and share price for those share options where the share price exceeds the exercise price at 30 September 2012.

The lease provision relates to the spreading of a reduced rent period over the full period of the lease.

21 Financial instruments

Financial assets and liabilities

Details of the accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset and financial liability are disclosed in the accounting policies note on pages 67 to 75.

Categories of financial assets and liabilities

Financial assets and liabilities are classified according to the following categories in the table below. The amounts disclosed are the contractual undiscounted net cash flows.

Financial assets

	2012	2011
	£000	£000
Cash and cash equivalents	41,734	33,961
Loans and receivables:
Trade receivables	36,659	35,299
Other receivables	1,972	2,272
Venue loans	3,544	2,867
Derivative financial instruments – designated cash flow hedge	4,215	300
Derivative financial instruments – equity option assets	52	–
	88,176	74,699

Financial liabilities

	2012	2011
	£000	£000
Bank overdraft	15,418	13,948
Bank loan	13,306	14,483
Amortised cost:
Trade payables	1,604	879
Other payables	2,339	3,104
Deferred consideration	381	–
Contingent consideration	480	4,139
Derivative financial instruments – put option liabilities	8,982	12,642
Derivative financial instruments – designated cash flow hedge	–	977
	42,510	50,172

During the year the put option liabilities and reserves relating to Scoop and Summit (where the Group does not already own a majority stake) have been reversed. The put option liability remaining at year end relates entirely to the put option over the 40% of Yem Fuar that the Group does not already own. The liability has been discounted at a rate of 5% and the undiscounted amount is £9.4 million. The equity option asset of £0.1 million relates to the fair value of the call option held over Summit, which is accounted for at fair value through profit and loss. The options held in respect of Scoop are valued at £nil.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

21 Financial instruments continued Maturity of financial instruments

In 2012, £4.5 million of the Yem Fuar put option had a maturity of one year or less, with the remaining £4.5 million having a maturity of more than one year. Out of the total of £4.3 million of derivative financial assets, £2.1 million had a maturity of one year or less and £2.2 million of one year or more.

In 2011, of the derivative financial liabilities, Ekin Fuar put option (£0.7 million) and an element of the derivative financial instruments (£0.2 million) had a maturity of one year or less. The remaining derivative financial liabilities of £12.7 million had a maturity of one year or more. Out of the total of £0.3 million of derivative financial assets, £0.2 million had a maturity of one year or less and £0.1 million of one year or more.

The Directors consider that the carrying amounts of financial assets and liabilities recorded at amortised cost in the financial statements approximate to their fair value due to the short maturity of the instruments.

Derivative assets

	2012		2011
	£000	2012	£000	2011
	Contractual	£000	Contractual	£000
	amounts	Fair value	amounts	Fair value
Foreign currency forward contracts	81,213	4,215	24,586	300
Equity option assets	1,669	52	–	–

Derivative liabilities

	2012		2011
	£000	2012	£'000	2011
	Contractual	£000	Contractual	£000
	amounts	Fair value	amounts	Fair value
Foreign currency forward contracts	–	–	57,789	977
Put option liabilities	8,982	8,892	12,642	12,642

The Group seeks to minimise the effects of foreign currency risks by using derivative financial instruments to hedge the risk exposures. The use of financial derivatives is governed by the Group's policies approved by the Board. Compliance with policies and exposure limits is reviewed by the Board on a continuous basis. The Group does not enter into financial instruments, including derivative financial instruments, for speculative purposes.

Fair value hierarchy

The following table categorises the Group's financial instruments which are held at fair value into one of three levels to reflect the degree to which observable inputs are used in determining their fair values:

	Fair value £000	Level 1 £000	Level 2 £000	Level 3 £000
Assets measured at fair value
Foreign currency forward contracts	4,215	–	4,215	–
Equity options	52	–	–	52
Total	4,267	–	4,215	52
Liabilities measured at fair value
Foreign currency forward contracts	–	–	–	–
Put options	8,982	–	8,982	–
Total	8,982	–	8,982	–

Level 1: Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measured using inputs, other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly.

Level 3: Fair values measured using inputs for the asset or liability that are not based on observable market data.

Financial risk management

In the course of its business, the Group is exposed to a number of financial risks: market risk (including foreign currency and interest rate), credit risk, liquidity risk and capital risk. This note presents the Group's exposure to each of the above risks. The Group's objectives, policies and processes for measuring and managing risks can be found in the Business Review on pages 32 to 37.

21 Financial instruments continued

The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established policies to identify and analyse risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits.

Market risk

Market risk is the risk that changes in foreign exchange rates and interest rates will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group enters into derivative financial instruments to manage its exposure to foreign currency risk. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies, hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward-plus or forward foreign exchange contracts.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Financial assets

	2012 £000	2011 £000
EUR	35,094	31,616
GBP	11,163	7,359
USD	5,182	4,707
RUB	16,801	17,163
Other	19,936	13,954
	88,176	74,799

Financial liabilities

	2012	2011
	£000	£000
EUR	13,427	12,934
GBP	15,137	2,660
USD	2,068	3,511
RUB	1,242	1,427
Other	10,636	15,157
	42,510	35,689

Foreign currency sensitivity analysis

The sensitivity analysis below details the impact of a 10% strengthening in the Group's significant currencies against Sterling, applied to the net monetary assets or liabilities of the Group.

	USD	EUR	RUB	Other
2012 (£000) Monetary assets Monetary liabilities	5,182 (2,068)	35,094 (13,427)	16,801 (1,242)	19,936 (10,636)
Net monetary assets	3,114	21,667	15,559	9,300
Currency Impact Profit before tax gain/(loss) Equity gain/(loss) 2011 (£000)	4 308	251 1,916	1,498 58	787 143
Monetary assets	4,707	31,616	17,163	13,954
Monetary liabilities	(3,511)	(12,934)	(1,427)	(15,157)
Net monetary assets Currency Impact	1,196	18,682	15,736	(1,203)
Profit before tax gain/(loss)	4	234	1,476	(105)
Equity gain/(loss)	116	1,634	98	(15)

Notes to the consolidated accounts continued

For the year ended 30 September 2012

21 Financial instruments continued

The following significant exchange rates versus Sterling applied during the year and in the prior year:

	Average		Reporting date
	2012	2011	2012	2011
EUR	1.21	1.15	1.25	1.15
USD	1.58	1.61	1.61	1.56
RUB	48.85	47.04	50.51	49.86

Forward foreign exchange contracts

As at 30 September 2012 the notional amounts of outstanding foreign currency forward contracts that the Group has committed to amounted to £81.2 million (2011: £82.4 million). These arrangements are designed to address significant exchange exposures for the next 36 months and are renewed on a revolving basis as required, subject to not committing the Group to less than six months or more than 36 months in the future.

At 30 September 2012, the fair value of these derivatives is estimated to be a net asset of approximately £4.2 million (2011: net liability of £0.7 million). These amounts are based on market valuations.

The Group has taken out foreign currency overdrafts in Euros and US Dollars to act as a natural hedge against certain currency trade receivable balances. These borrowings have not been designated as hedging instruments by management. All foreign exchange movements on these borrowings and trade receivables are recognised directly in the income statement.

Interest rate risk management

As the Group has no significant interest-bearing assets, other than cash, the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Group is exposed to interest rate risk through its borrowings at floating interest rates. This risk is managed by the Group by maintaining an appropriate level of floating interest rate borrowings. The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section of this note.

Interest structure of financial liabilities

	2012	2011
	£000	£000
Financial liabilities at variable rates:
Bank overdraft	15,418	13,948
Bank loan	13,306	14,483

The following average interest rates applied during the year and in the prior year:

		Bank loan		Bank overdraft
	2012 %	2011 %	2012 %	2011 %
GBP	–	–	1.4	–
EUR	2.2	3.8	2.6	2.5
USD	–	–	2.1	2.5

Average interest rate applicable to cash balances were 3.7% in 2012 and 5.3% in 2011.

21 Financial instruments continued

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for financial assets and financial liabilities at the balance sheet date. With all other variables held constant the table below demonstrates the sensitivity to a 1% change in interest rates applied to the major currencies of net variable rate asset/liabilities. 1% is the sensitivity rate that represents management's assessment of the reasonably possible change in interest rates.

	USD denominated		EUR denominated		GBP denominated		RUB denominated		Other
	2012	2011	2012	2011	2012	2011	2012	2011	2012	2011
Cash and cash equivalents	3,939	1,093	10,362	9,578	9,117	4,401	7,650	12,411	10,666	6,478
Bank overdraft	(2,068)	(2,380)	–	(11,568)	(13,350)	–	–	–	–	–
Bank loan	–	–	(13,306)	(9,583)	–	(4,900)	–	–	–	–
Net variable rate
(liabilities)/assets	1,871	(1,287)	(2,944)	(11,573)	(4,233)	(499)	7,650	12,411	10,666	6,478
		USD denominated	EUR denominated		GBP denominated		RUB denominated		Other
	2012	2011	2012	2011	2012	2011	2012	2011	2012	2011
Profit before tax – (loss)/gain
+1% change in interest rates	19	(13)	(29)	(116)	(42)	(5)	77	124	107	65
–1% change in interest rates	(19)	13	29	116	42	5	(77)	(124)	(107)	(65)

Credit risk management

Credit risk arises because a counterparty may fail to perform its contractual obligations. The Group's principal financial assets are cash and cash equivalents, trade and other receivables, venue advances and derivative financial instruments.

These represent the Group's maximum exposure to credit risk. The Group's credit risk is primarily attributable to its trade and other receivables. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's objective is to ensure all customers have paid before any service is provided to them. The concentration of credit risk is limited due to the customer base being large and unrelated.

The ageing profile of the Group's trade receivables and the details of the Group's allowances for doubtful receivables can be seen below.

The credit risk on liquid funds and derivative financial instruments arises due to where the liquid funds are held. The territories in which ITE operates do not always have banks with high credit ratings assigned by international credit rating agencies such as Moody's and Fitch. The Group aims to minimise the exposure to credit risk by minimising the level of cash held in such banks. The Group's exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved financial institutions.

Credit rating of financial assets (excluding loans and receivables and derivative assets)

	2012	2011
	£000	£000
Investments grade A and above	25,589	20,548
Investments grade B and above	12,192	11,631
Investments grade C or below or not rated	3,953	1,782
	41,734	33,961

The source of the credit ratings is Moody's and Fitch.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

21 Financial instruments continued Ageing profile of trade receivables

		Show start date		Contract terms
	2012 £000	2011 £000	2012 £000	2011 £000
Not past due	34,392	32,164	15,881	17,695
Past due 1–30 days	1,666	2,687	10,419	11,394
Past due 31–60 days	62	61	4,421	2,490
Past due 61–90 days	7	20	1,828	1,439
Past due 91–120 days	108	12	2,231	1,213
Past due more than 120 days	424	355	1,879	1,068
	36,659	35,299	36,659	35,299

Management review debtors ageing on a contractual basis and also based on when an event has been held. The Group raise invoices on events using stage payments. Any overdue amounts, after the stage payment due date, are reviewed and chased. Management also review the debts due based on when an event has taken place, as this is typically when the service is provided. Both measures are included in the table above as both are used by management to manage outstanding debts.

The trade receivables amounts presented in the Balance Sheet are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience, specific credit issues and their assessment of the current economic environment. Trade receivables consist of a large number of customers spread across diverse industries and geographical areas and the Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group's customer base, including default risk of the industry and country, in which the customers operate, has less of an influence on credit risk.

The Group establishes an allowance for doubtful debts that represents its estimate of incurred losses in respect of trade receivables when there is objective evidence that the debt will not be collected in full. The allowance is recognised and measured as the difference between the asset's carrying amount and the present value of future cash flows. Where material, it is discounted at the effective interest rate computed at initial recognition. The main component of this allowance is a specific loss component that relates to individually significant exposure on shows which have taken place but the debt has not been collected in full. This allowance is determined by reference to the specific circumstances of each show and past experience.

The details of the movement in the allowance for doubtful receivables are shown below.

Allowance for doubtful receivables

	2012 £000	2011 £000
At 1 October Allowances made in the period	660 368	500 173
Amounts used and reversal of unused amounts	(553) 475	(13) 660
Ageing of impaired receivables	2012 £000	2011 £000
Past due 0–3 months Past due 3–6 months Past due more than 6 months	139 74 262	92 90 478
	475	660

An allowance for doubtful receivables relating to venue loans of £0.3 million is held (2011: £0.5 million). During the period £0.2 million was released (2011: £nil). No additional allowances were made in the period.

Liquidity risk management

Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due. Such risk may result from inadequate market depth or disruption or refinancing problems. Ultimate responsibility for liquidity risk management rests with the Board of Directors. They have built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements.

The Group manages liquidity risk by ensuring continuity of funding for operational needs through cash deposits and debt facilities as appropriate.

21 Financial instruments continued

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents, bank overdraft and bank loan which is disclosed in note 17 and note 18 and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in note 23 and in the consolidated statement of changes in equity.

22 Deferred tax

At 30 September 2012	46	(12,157)	–	495	(969)	759	(825)	(12,651)
Exchange	–	–	3	(10)	–	–	–	(7)
Acquisition of subsidiary	–	(1,208)	–	–	–	–	–	(1,208)
Charge to equity	–	–	–	–	(1,138)	–	–	(1,138)
Charge to OCI	442	(1,832)	–	–	–	(49)	–	(1,439)
(Charge)/credit to income	(111)	2,912	(178)	(288)	–	(1)	(200)	2,134
At 1 October 2011 Transfers	(285)	(12,029)	175	831 (38)	169	809	(625)	(10,955) (38)
Exchange	–	–	–	–	–	–	–	–
Acquisition of subsidiary	–	–	–	25	–	–	–	25
Credit to equity	–	(9,235)	–	–	–	–	–	(9,235)
Charge to OCI	–	–	–	–	–	5	–	5
Credit to income	–	–	–	–	326	–	–	326
Transfers	159	2,003	175	(41)	–	78	(13)	2,361
At 1 October 2010	(444)	(4,797)	–	847	(157)	726	(612)	(4,437)
	£000	£000	£000	£000	£000	£000	£000	£000
	tax depreciation	Intangibles	Tax losses	Provisions and accrual	Hedges	Share-based payments	Repatriation of profit	Total
	Accelerated

Certain deferred tax assets and liabilities have been offset in the above table. The following is the analysis of deferred tax balances for financial reporting purposes:

	2012 £000	2011 £000
Deferred tax liabilities Deferred tax assets	(14,414) 1,763	(13,067) 2,112
	(12,651)	(10,955)

At the balance sheet date, the Group has unused tax losses of £3.5 million (2011: £3.0 million) available for offset against future profits. No deferred tax asset has been recognised in respect of these losses in either year due to the unpredictability of future profit streams. These losses may be carried forward indefinitely.

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised was £39.7 million (2011: £13.0 million). No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

23 Share capital

	2012	2011
	£000	£000
Authorised
375,000,000 ordinary shares of 1 penny each (2011: 375,000,000)	3,750	3,750
Allotted and fully-paid
248,863,407 ordinary shares of 1 penny each (2011: 248,568,749)	2,489	2,486

During the year, the Company allotted 294,658 (2011: 256,547) ordinary shares of 1 penny each pursuant to the exercise of share options. No (2011: nil) ordinary shares were issued in respect of Directors remuneration. The total consideration for the shares issued was £72,097 (2011: £38,478).

Notes to the consolidated accounts continued

For the year ended 30 September 2012

23 Share capital continued

The Company has one class of ordinary shares which carry no right to fixed income. At the Extraordinary General Meeting held on 17 November 1998, shareholders approved the establishment of the ITE Group Employee Share Ownership Trust ('ESOT'). The terms of the ESOT allow the trustees to transfer shares to employees who exercise options under the Company's Share Option Schemes, to grant options to employees and to accumulate shares by buying in the market or subscribing for shares at market value. The ESOT is capable of holding a maximum of 5% of the Company's issued ordinary share capital. The ESOT reserve arises in connection with the ESOT. The amount of the reserve represents the deduction in arriving at shareholders funds for the consideration paid for the Company's shares purchased by the Trust which had not vested unconditionally in employees at the balance sheet date.

The ESOT held 5,366,722 shares in ITE Group plc at 30 September 2012 (2011: 8,102,687 shares). During the year 361,000 share options and 1,063,000 nominal share options under the Employees Performance Share Plan were granted against ESOT held shares. The market value of the ordinary shares held by the ESOT at 30 September 2012 was £11.1 million (2011: £12.8 million).

The Company has agreed to make available to the ESOT an interest-free loan of up to £12.5 million for the purpose of buying shares. At 30 September 2012, the amount of the loan drawn down was £8.6 million. The ITE Group plc Company only profit and loss account and balance sheet include the results of the ESOT for the year ended 30 September 2012. The trustees have waived their current and future rights to all dividend entitlement on the shares held by the ESOT. 2,735,965 options were exercised by ESOT during the year. The total consideration for the options exercised by ESOT was £705,566. 5,833,295 of outstanding options are to be settled by ESOT, so all shares held by the ESOT are under option as at 30 September 2012. Details of the options in issue and their exercise dates can be seen at note 26 to the accounts.

24 Non-controlling interests

	2012 £000	2011 £000
1 October Non-controlling interest arising on acquisition during the year Dividends paid to non-controlling interests during the year Reduction in non-controlling interest due to acquisition of non-controlling interest during the year Profit on ordinary activities after taxation	7,059 – (936) (472) 1,045	1,123 6,554 – (696) 78
30 September	6,696	7,059
25 Operating lease arrangements The Group has a number of operating leases for which it is a lessee.	2012 £000	2011 £000
Lease payments under operating leases recognised as an expense in the year: Land and buildings Venues	2,304 37,346	3,623 31,025

At 30 September 2012 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	Land and		Land and
	buildings	Venues	buildings	Venues
	2012	2012	2011	2011
	£000	£000	£000	£000
Within one year	1,485	11,921	2,345	11,434
Between two and five years	2,926	–	2,805	–
After five years	1,090	–	1,207	–
	5,501	11,921	6,357	11,434

Operating lease payments for land and buildings represent rentals payable by the Group for its office properties. Leases are negotiated for an average term of two years. Payments for venues represent the non-cancellable amount of contracted venue agreements for future events.

The Group also earned rental income of £0.3 million during the year (2011: £0.3 million).

26 Share-based payments

The Company operate two share option schemes.

Share option plans

The Company operates a share option plan for all employees of the Group. Options are exercisable at a price equal to the average quoted market price of the Company's share on the date of grant. The vesting period is either three or five years and are exercisable up to ten years from granting. The options are forfeited if the employee leaves the Group before the options vest.

Performance share plans

The Company operated a Performance Share Plan ('PSP') for executives and staff. Awards under the PSP are at an exercise value of either 1p or nil. Awards can be made to an employee over shares up to a maximum of 100% of base salary each year based on market value. The vesting period is three years and awards are exercisable up to ten years from the date of grant. For conditional awards the vesting is automatic on the satisfaction of performance targets. The options are forfeited if the employee leaves the Group before the options vest. The awards are also subject to a performance target. Further details of the performance targets can be found in the Report on Remuneration on pages 57 to 58.

Details of the share options outstanding as at 30 September 2012 are as follows:

	Number of share options 2012	Weighted average exercise price (p) 2012	Number of share options 2011	Weighted average exercise price (p) 2011
Share option plans Outstanding at beginning of period Granted during the period Lapsed during the period Exercised during the period	4,086,400 361,000 (213,500) (1,669,500)	132.6 206.0 (199.6) 52.6	3,754,850 1,726,500 (216,500) (1,178,450)	88.5 231.5 (139.7) 117.8
	2,564,400	189.4	4,086,400	132.6
Performance share plans Outstanding at beginning of period Granted during the period Lapsed during the period Exercised during the period	4,579,674 1,063,000 (21,000) (1,361,123)	1.0 1.0 (1.0) 1.0	4,755,620 915,850 (196,500) (895,296)	1.0 1.0 (1.0) 1.0
	4,260,551	1.0	4,579,674	1.0

The total amount of exercisable options in the share option plans is 433,400 and in the performance share plans is 315,000.

The weighted average share price at the date of exercise for share options exercised during the period was 223p. The options outstanding at 30 September 2012 had a weighted average exercise price of 72p, and a weighted average remaining contractual life of 410 days. In 2012, Share Options and Performance Share Plan options were granted on 10 January 2012. The aggregate of the estimated fair value of these options is £0.2 million and £2.0 million respectively.

The inputs into the Black-Scholes model for the instruments issued during the year are as follows:

	Performance	Share	Performance	Share
	share plan	options plan	share plan	options plan
	2012	2012	2011	2011
Weighted average share price	1p	206p	1p	231p
Weighted average exercise price	1p	206p	1p	231p
Expected volatility	43.0%	43.0%	40.4%	40.4%
Expected life	4 years	4 years	4 years	4 years
Risk free rate	0.82%	0.82%	2.21%	2.21%
Dividend yield	2.7%	2.7%	2.6%	2.6%

The Group recognised a total expense of £2.1 million (2011: £1.7 million) related to equity-settled share-based payment arrangements.

Notes to the consolidated accounts continued

For the year ended 30 September 2012

27 Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates, where relevant, are disclosed below.

Trading transactions

In Kazakhstan, ITECA, a Group subsidiary, has transacted with Datacom and Saban Holdings for the provision of web systems and office rental respectively. Edward Strachan, a Group Director, is a significant shareholder of Datacom and Saban Holdings. In total, the services charged to ITECA were £72,000 (2011: £54,000).

In St Petersburg, Primexpo, a Group subsidiary, has transacted with Cavalry House for the provision of office rental. Edward Strachan, a Group Director, is a significant shareholder of Cavalry House. In total, the services charged to Primexpo were £192,000 (2011: £190,000).

During the year consultancy fees of £238,000 (2011: £303,000) were paid to and a bonus of £224,000 (2011: £330,000) was earned by Kyzyl Tan Eurasian Advisors Limited ("Kyzyl Tan") of which Edward Strachan is a significant shareholder. Kyzyl Tan was also paid a living away from home allowance of £19,000 (2011: £38,000). These payments were made under a contract for Kyzyl Tan to provide the services of Edward Strachan to the Group.

During the year the Company made a non-contractual, voluntary payment of £5,000 to Kyzyl Tan Foundation, a charity of which Edward Strachan is a trustee.

Remuneration of key management personnel

The remuneration of Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related party disclosures. Further information about the remuneration of individual Directors is provided in the audited part of the Report on Remuneration on pages 52 to 58.

	2012 £000	2011 £000
Emoluments Share-based payment	1,991 1,383	2,163 581
	3,374	2,744

28 Post balance sheet events

On 3 December 2012, ITE's wholly owned subsidiary, Airgate Holdings Ltd, entered into binding agreements for the acquisition of a 28.3% holding in Asian Business Exhibition & Conferences Limited ('ABEC'), a company incorporated in Mumbai. Consideration of INR 1,227 million was settled in cash. The Group has written a put option over an additional 31.7% stake in ABEC.

ABEC is expected to be earnings enhancing in ITE's 2013 financial year.

Due to the proximity to the date of signing of these accounts, the accounting and disclosure impact of ABEC has not been finalised.

On 19 November 2012 the Group refinanced its borrowings under its existing facility. See note 18 for more details

Independent Auditor's Report to the Members of ITE Group plc

We have audited the parent company financial statements of ITE Group plc for the year ended 30 September 2012 which comprise the Parent Company Balance and the related notes 1 to 10. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and nonfinancial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

• In our opinion the parent company financial statements:
• – give a true and fair view of the state of the company's affairs as at 30 September 2012 and of its profit for the year then ended;
• – have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• – have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

• In our opinion:
• – the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• – the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the parent company financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• – adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• – the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
• – certain disclosures of directors' remuneration specified by law are not made; or
• – we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the group financial statements of ITE Group plc for the year ended 30 September 2012.

Alexander Butterworth (Senior Statutory Auditor)

for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 3 December 2012

Company balance sheet

30 September 2012

	Notes	2012 £000	2011 £000
Fixed assets Investments in subsidiaries Intangible assets	5 5	4,714 33	3,807 25
Current assets		4,747	3,832
Debtors due within one year Cash at bank and in hand	6	115,019 316	100,076 74
Deferred tax asset Creditors: amounts falling due within one year	7 8	259 115,594 (7,976)	249 100,399 (798)
Net current assets		107,618	99,601
Total assets less current liabilities		112,365	103,433
Net assets		112,365	103,433
Capital and reserves Called up share capital Share premium account Merger reserve Capital redemption reserve ESOT reserve Profit and loss account	9,10 10 10 10 10 10	2,489 2,792 2,746 457 (5,183) 109,064	2,486 2,724 2,746 457 (7,826) 102,846
Shareholders' funds		112,365	103,433

The accounts of the Company, registered number 01927339, on pages 101 to 105, were approved by the Board of Directors and signed on their behalf, on 3 December 2012, by:

Russell Taylor Chief Executive Officer Neil Jones Finance Director 3 December 2012 3 December 2012

Notes to the Company accounts

For the year ended 30 September 2012

1 Basis of accounting

The separate financial statements of the Company are presented as required by the Companies Act 2006. The financial statements have been prepared on a going concern basis as discussed in the Group going concern disclosure on page 67.

These accounts have been prepared under the historical cost convention and in accordance with Companies Act 2006 and United Kingdom Accounting Standards and have been applied consistently.

The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year.

Investments

Fixed asset investments are shown at cost less provision for any impairment.

Intangible assets

Trademarks are measured initially at purchase cost and have a definite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful life. The estimated useful lives are up to 20 years.

Provisions

Provisions are recognised when the Company has a present legal obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Financial instruments

Financial assets and financial liabilities are recognised on the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument.

Trade debtors and creditors

Trade debtors and creditors are stated at their nominal value. Trade debtors are reduced by appropriate allowances for estimated irrecoverable amounts.

Bank borrowings

Bank overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges are accounted for on an accrual basis to profit or loss.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Taxation

Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements. Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacement assets are sold.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Notes to the Company accounts continued

For the year ended 30 September 2012

1 Basis of accounting continued

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the rates of exchange prevailing at that date. Non-monetary assets and liabilities are translated at the rate prevailing at the date the fair value was determined. Gains and losses arising on retranslation of monetary assets are included in profit or loss for the period.

Employee Share Trust

The financial statements include the assets and liabilities of the Employee Share Trust ('ESOT'). Shares in the Company held by the ESOT have been valued at cost and are held in equity. The costs of administration of the ESOT are written off to profit or loss as incurred.

Where such shares are subsequently sold, any net consideration received is included in equity attributable to the Company's equity holders.

Share-based payments

The Company issues equity-settled share-based payments to certain employees. These are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Fair value is measured using a Black-Scholes model. The expected life used in the model has been adjusted, for the effects of non-transferability, exercise restrictions and behavioural considerations based on management's best estimate.

2 Profit for the year

The profit after tax for the year ended 30 September 2012 was £21.0 million (2011: loss of £2.5 million). As permitted by Section 408 of the Companies Act 2006, no separate profit and loss account is presented in respect of the Company.

The auditor's remuneration for audit and other services is disclosed in note 6 to the consolidated financial statements.

3 Staff costs

a) Number of employees

The average number of persons (including Directors) employed by the Company during the year was as follows:

	2012 Number	2011 Number
Directors	7	7

b) Employee costs

Their aggregate remuneration comprised:

	2012 £000	2011 £000
Wages and salaries Social security costs Share-based payments	1,981 203 738	2,163 281 581
	2,922	3,025
Highest paid Director	784	808

4 Dividends

	2012 £000	2011 £000
Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 30 September 2011 of 4.2p (2010: 4.0p) per ordinary share Interim dividend for the year ended 30 September 2012 of 2.1p (2011: 1.9p) per ordinary share		9,537 4,568
	15,220	14,105
Proposed final dividend for the year ended 30 September 2012 of 4.4p (2011: 4.2p) per ordinary share	10,714	10,100

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

4 Dividends continued

Under the terms of the trust deed dated 20 October 1998, the ITE Group Employees Share Trust, which holds 5,366,722 (2011: 8,102,687) ordinary shares representing 3% of the Company's called-up ordinary share capital, has agreed to waive all dividends due to it.

5 Fixed assets

Investments in subsidiaries

The Company has investments in the following subsidiary undertakings and associates which principally affected the results or net assets of the Group. To avoid a statement of excessive length, details of investments which are not significant have been omitted. The principal activity of all the companies listed is the organisation of exhibitions and conferences, except RAS Holdings Limited and RAS Publishing Limited which publish trade magazines.

Subsidiary undertakings	Country of incorporation or principal business address	Effective holding	%
International Trade and Exhibitions (JV) Limited	England	Ordinary shares	100
ITE Exhibitions & Conferences Limited	England	Ordinary shares	100
IEG International Limited1	England	Ordinary shares	100
Intermedia Exhibitions and Conferences Limited	England	Ordinary shares	100
IEG-Gima International Exhibition Group GmbH & Co KG	Germany	Ordinary shares	100
International Trade and Exhibitions (ITE) Worldwide B.V.	Netherlands	Ordinary shares	100
E Uluslararasi Fuar Tantitim Hizmetleri A.S.	Turkey	Ordinary shares	100
Premier Expo	Ukraine	Ordinary shares	100
ITE LLC	Russia	Ordinary shares	100
ITE Expo LLC	Russia	Ordinary shares	100
OOO Primexpo	Russia	Ordinary shares	100
ITECA	Kazakhstan	Ordinary shares	100
Iteca Caspian LLC	Azerbaijan	Ordinary shares	100
ITE Uzbekistan	Uzbekistan	Ordinary shares	100
ITE Moda Limited	England	Ordinary shares	100
ITE Enterprises Limited	England	Ordinary shares	100
RAS Holdings Limited	England	Ordinary shares	100
RAS Publishing Limited	England	Ordinary shares	100
ITE Moda Footwear Ltd	England	Ordinary shares	100
ITE Footwear Limited	England	Ordinary shares	75
ITE Exhibitions BV	Netherlands	Ordinary shares	100
ITE Exhibitions Iberica SL	Spain	Ordinary shares	100
ITE Asia Pacific SDN BHD	Malaysia	Ordinary shares	100
ITE Gulf FZ LLC	United Arab Emirates	Ordinary shares	100
Primexpo North West LLC	Russia	Ordinary shares	100
Siberian Fair LCC	Russia	Ordinary shares	100
ITE Holdings Ltd1	England	Ordinary shares	100
Newex Marketing Limited	Malta	Ordinary shares	87.5
Airgate Holdings Limited	England	Ordinary shares	100
Fin-mark S.r.l.u	Italy	Ordinary shares	100
International Exhibition Company CJSC ('MVK')	Russia	Ordinary shares	100
Krasnodar Expo	Russia	Ordinary shares	100
Yem Fuar	Turkey	Ordinary shares	60
Beautex Co LLC	Ukraine	Ordinary shares	100
Jacket Required Limited	England	Ordinary shares	100

1 Held directly by ITE Group plc.

Notes to the Company accounts continued

For the year ended 30 September 2012

5 Fixed assets continued Subsidiary undertakings

		Capital
	Shares	contribution	Loans	Total
	£000	£000	£000	£000
Cost
1 October 2011	1,429	2,807	23,574	27,810
Capital contribution	–	907	–	907
30 September 2012	1,429	3,714	23,574	28,717
Provision for impairment
1 October 2011 and 30 September 2012	429	–	23,574	24,003
Net book value
30 September 2012	1,000	3,714	–	4,714
30 September 2011	1,000	2,807	–	3,807

Intangible assets

	Trademarks £000
Cost
1 October 2010 and 30 September 2011	37
Additions in the year	10
30 September 2012	47
Amortisation
1 October 2011	12
Charge in the year	2
30 September 2012	14
Net book value
30 September 2012	33
30 September 2011	25

6 Debtors due within one year

	2012	2011
	£000	£000
Amounts owed by Group undertakings	114,372	99,226
Venue advances and other loans	476	521
Prepayments and accrued income	158	282
Other debtors	13	47
	115,019	100,076

The amounts owed by Group undertakings are payable on demand and bear no interest.

7 Deferred tax

30 September 2012	259
1 October 2011 Charged to income	249 10
	payments £000
	Share-based

At the balance sheet date the Company has unused tax losses of £800,000 (2011: £800,000) available for offset against future profits. No deferred tax asset has been recognised in respect of these losses due to the unpredictability of future profit streams.

8 Trade and other creditors

	2012	2011
	£000	£000
Amounts owed to Group undertakings	7,823	510
Accruals	25	27
Other creditors	155	50
Corporation tax – Group relief	(27)	211
	7,976	798

The amounts owed to Group undertakings are payable on demand and bear no interest.

9 Called up share capital

	2012 £000	2011 £000
Authorised 375,000,000 ordinary shares of 1 penny each (2011: 375,000,000)	3,750	3,750
Allotted, called up and fully-paid 248,863,407 ordinary shares of 1 penny each (2011: 248,568,749)	2,489	2,486

During the year, the Company allotted 294,658 (2011: 256,547) ordinary shares of 1 penny each pursuant to the exercise of share options. No (2011: nil) ordinary shares were issued in respect of Directors remuneration. The total consideration for the shares issued was £72,097 (2011: £38,478).

During the year, the Company purchased no shares for the Employee Share Option Trust.

10 Reserves and reconciliation of equity shareholders' funds

30 September 2012	2,489	2,792	2,746	457	(5,183)	109,064	112,365
Share-based payments	–	–	–	–	–	1,645	1,645
Dividends paid	–	–	–	–	–	(15,220)	(15,220)
Net profit for the year	–	–	–	–	–	21,027	21,027
Exercise of options	3	68	–	–	2,643	(1,234)	1,480
30 September 2011	2,486	2,724	2,746	457	(7,826)	102,846	103,433
Share-based payments	–	26	–	–	–	453	479
Dividends paid	–	–	–	–	–	(14,105)	(14,105)
Issue of share capital	3	–	–	–	–	–	3
Net loss for the year	–	–	–	–	–	(2,520)	(2,520)
Exercise of options	–	–	–	–	1,812	(106)	1,706
1 October 2010	2,483	2,698	2,746	457	(9,638)	119,124	117,870
	£000	£000	£000	£000	£000	£000	£000
	share capital	account	reserve	reserve	reserve	loss account	Total
	Called up	premium	Merger	redemption	ESOT	Profit and
		Share		Capital

Shareholder Information

Shareholder profile as at 30 September 2012

Range of holdings	Number of shareholders	Percentage of total shareholders	Ordinary shares (million)	Percentage of issued share capital
1–100 101–1,000 1,001–10,000 10,001–100,000 100,001–1,000,000 1,000,001–highest	214 304 414 136 99 46	17.64% 25.06% 34.13% 11.21% 8.17%	6,235 159,685 1,236,626 4,846,271 38,765,381 3.79% 203,849,209	0.00% 0.06% 0.50% 1.95% 15.58% 81.91%
	1,213		100% 248,863,407	100%
Category	Number of shareholders	Percentage of total shareholders	Ordinary shares (million)	Percentage of issued share capital
Private individuals Nominee companies Limited and public limited companies Other organisations and banks	845 323 22 23	69.66% 1.81% 1.90%	6,091, 965 26.63% 239,665,090 699,873 2,406,479	2.45% 96.30% 0.28% 0.97%
	1,213		100% 248,863,407	100%

Dividend mandates

Shareholders who wish dividends to be paid directly into a bank or building society account should contact the Registrar for a dividend mandate form.

This method of payment removes the risk of delay or loss of dividend cheques in the post and ensures that your account is credited on the due date.

Share dealing services

The Company's Registrar, Equiniti Financial Services Limited, offer a telephone and internet dealing service, Shareview, which provides a simple and convenient way of buying and selling shares. For telephone dealings call 08456 037 037 between 8.00am and 4.30pm, Monday to Friday, and for internet dealings log onto www.shareview.co.uk/dealing.

Electronic communications

Shareholders can elect to receive shareholder documents electronically by registering with Shareview at www.shareview.co.uk. This will save on printing and distribution costs, creating environmental benefits. When you register, you will be sent an email notification to say when shareholder documents are available on our website and you will be provided with a link to that information. When registering, you will need your shareholder reference number which can be found on your share certificate or proxy form. Please contact Equiniti if you require any assistance or further information.

Principal bankers

Company brokers Numis Securities Limited

Registrars

Public relations

Website

Financial calendar Final dividend 2012

Directors Marco Sodi Non-executive Chairman	Registration number 1927339
Russell Taylor Chief Executive Officer	Auditors Deloitte LLP London
Neil England Non-executive Director	Solicitors Olswang
Michael Hartley Non-executive Director	90 High Holborn London WC1V 6XX
Linda Jensen Non-executive Director Neil Jones	Principal bankers Barclays Bank plc 27 Soho Square London W1D 3QR
Finance Director	Company brokers
Edward Strachan Executive Director	Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT
Company Secretary John Price	Registrars
Registered office ITE Group plc 105 Salusbury Road London NW6 6RG	Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA
	Public relations FTI Consulting Holborn Gate 26 Southampton Buildings London WC2A 1PB
	Website www.ite-exhibitions.com
Financial calendar Final dividend 2012
Ex dividend date Record date Annual General Meeting Payment date	2 January 2013 4 January 2013 31 January 2013 11 February 2013
Interim dividend 2013
Ex dividend date Record date Payment date	3 July 2013 5 July 2013 8 August 2013

Interim dividend 2013

Ex dividend date	3 July 2013
Record date	5 July 2013

Financial Statements

ITE Group plc 105 Salusbury Road London NW6 6RG UK