HYVE GROUP PLC — Earnings Release 2017

May 16, 2017

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RNS Number : 2005F

ITE Group PLC

16 May 2017

16 May 2017

ITE GROUP PLC

INTERIM RESULTS & STRATEGY UPDATE ANNOUNCEMENT

Good performance in challenging trading conditions

3 Year Transformation & Growth Programme (TAG) initiated

	Six months to 31 March 2017	Six months to 31 March 2016
Volume sales	325,200 m2	340,100 m2
Revenue	£69.6m	£63.6m
Pre-tax profit	£3.1m	£10.6m
Headline pre-tax profit1	£15.4m	£19.0m
Diluted earnings per share	0.6p	2.8p
Headline diluted earnings per share2	3.9p	5.2p
Interim dividend per share	1.5p	1.5p
Net debt	£55.2m	£69.6m

Financial highlights

·        Results in line with management expectations

·        The first period of like-for-like3 growth after three years of difficult trading

·        Statutory revenue up to £69.6 million; statutory profit before tax down to £3.1 million due to event timings, foreign exchange and restructuring costs

·        Ongoing stabilisation in Moscow is encouraging but trading remains challenging in a number of regions

·        Continued strong cash generation; reduced net debt from £59.1 million at 30 September 2016 to £55.2 million at 31 March 2017

·        Interim dividend maintained

·        Improved level of bookings partly reflects new management sales initiatives

·        Confidence in full year outcome with over 98% of revenues for FY 2017 contracted

Strategy update

·        Comprehensive review of the strategy and business completed

·        3 year Transformation & Growth Programme ("TAG") to create a scalable platform and drive organic growth

·        Investment of up to £20 million to be funded by existing cash generation; anticipated strong ROI by 2020

·        Dividend cover maintained at 2x throughout investment period

Mark Shashoua, CEO of ITE Group plc, commented:

"I'm pleased to report that the Group has arrested its recent decline and posted like-for-like growth after three years of difficult trading. The first half performance reflects a more stable market in Moscow which is encouraging, but mixed market conditions remain in some of our other regions. We have completed a thorough review of the entire business and have concluded that there are significant organic opportunities in ITE's existing core portfolio that have yet to be realised.

Therefore, I am delighted to announce today the evolution of our strategy and a £20 million Transformation and Growth Programme that will deliver a stronger, more scalable platform to drive organic growth with an emphasis on retention, content and customer service. By putting our exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth and shareholder value."

1  Headline pre-tax profit is defined as profit before tax and adjusting items which include amortisation of acquired intangibles, impairment of goodwill, intangible assets and investments, profits or losses arising on disposal of Group undertakings, restructuring costs, transaction and integration costs on completed and pending acquisitions and disposals, tax on income from associates and joint ventures, gains or losses on the revaluation of deferred/contingent consideration and on equity option liabilities over non-controlling interests, and imputed interest charges on discounted equity option liabilities - see note 3 to the condensed consolidated financial statements for details.

2  Headline diluted earnings per share is calculated using profit attributable to shareholders before adjusting items - see notes 3 and 6 to the condensed consolidated financial statements for details.

3  Where used, like-for-like or underlying measures are stated on a constant currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences, biennial events and net finance costs.

Enquiries:

Mark Shashoua, Chief Executive Officer Andrew Beach, Chief Financial Officer	ITE Group plc	020 7596 5000
Charles Palmer/Emma Appleton	FTI Consulting	020 3727 1021
Nick Westlake/Toby Adcock	Numis	020 7260 1000

Executive summary

ITE has delivered a set of interim results which are assisted by the ongoing stabilisation of Moscow but reflect continued challenging trading conditions in some of the Group's other markets.  Revenues of £69.6 million for the first six months are 9% higher than last year as a result of improved underlying trading (£1.4 million), foreign exchange (£5.8 million) and acquired events (£3.3 million), offset by the adverse impact from net biennial events (£2.3 million) and changes in event timings (£2.2 million). The improvement in underlying trading (£1.4 million) represents an increase of 2%.

Headline pre-tax profits of £15.4 million are 19% lower than the same period last year, yet up 2% on a like-for-like basis. The reduction is due in part to the non-recurrence of a £1.5 million foreign currency exchange gain in the comparative period, which has been replaced by a loss of £0.2 million in the current period. Underlying trading (£0.3 million), which includes the share of profits from associates and previously announced additional investment in overheads, foreign exchange (£0.2 million) and acquisitions (£0.5 million) have increased headline pre-tax profits, but are offset by the net impact from biennials (£0.8 million), timing changes (£1.8 million) and increased net finance costs (£0.3 million).

Reported profits before tax were £3.1 million (2016: £10.6 million). This is after including one-off restructuring costs of £2.3 million incurred in the first phase of the TAG Programme, announced today.

In December 2016 the Group completed the acquisition of the Gehua portfolio of events in China, with the first event post-ownership running in March contributing revenues of £0.9 million. Other events relating to recent acquisitions running for the first time under ITE ownership contributed revenues of £2.4 million, the majority of which relate to ABEC events in India.

The ongoing stabilisation of the trading environment in Moscow has enhanced performance in this significant part of our business, but this stabilisation has not yet spread to the remaining regions of Russia, nor to Kazakhstan or Azerbaijan, which continue to be impacted by the difficult trading environment we have experienced since the fall in oil prices.  In Moscow like-for-like volumes over the first half were 5% higher than this time last year, although for Russia overall growth was just 1% and in Kazakhstan volumes were 25% lower and in Azerbaijan 42% lower.

In other regions, the Group has seen demonetisation in India, which has created uncertainty for many in the country, resulting in cancellations and postponements of a number of our smaller events. The continued uncertainty in Turkey has resulted in a number of cancellations by international exhibitors, although the improvement in relations with Russia resulted in the return of some Turkish exhibitors to our Russian exhibitions.

Strategic Review

A detailed diagnostic of the current portfolio and its growth potential has been undertaken as part of the Group's strategy review. Alongside this, a comprehensive review of key business areas was conducted including sales and marketing, content, show operations and support functions.

In recent years the Group pursued an acquisition-led strategy in order to diversify away from Russia and Central Asia which worked well when market conditions were buoyant, but as has been well documented, trading performance has deteriorated as macro-economic conditions have become more challenging. To execute its diversification strategy and in order to protect margins, investment was held back across the portfolio.

During the review process, management time has been spent on understanding where ITE's strengths lie and how the business needs to evolve. The events industry has changed and continues to evolve faster than ever and that change is largely driven by the different demands of our customers (exhibitors and visitors). More than ever, there is a constant need for Return on Investment and Return on Time which are critical key metrics for our customers and also a need for new and engaging customer experience. Therefore running market leading events is absolutely paramount.

Following a thorough strategy and business review, the Group believes the future is to move decisively from being a decentralised, geographically structured business to one that is product-led with strong regional platforms.

Our vision is "to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers." By putting exhibitors and visitors at the heart of everything we do, we plan to drive sustainable growth for our shareholders.

The Group's focus on a product-led strategy will see ITE focus on events that are market leading or have a clear path to become number one in their sector. To create a best in class events business, the Group will invest in its people, systems and products in order to build a high quality portfolio and sustainable model for the long-term.

The Transformation & Growth Programme ("TAG")

In order to drive the transition, ITE has initiated the TAG Programme which will see it invest up to £20 million over the next three years, creating a stronger, more scalable platform. The TAG Programme comprises of three pillars of strategic activity to drive revenue and accelerate growth as follows:

1)     Create a Scalable Platform 

The TAG Programme will introduce transformational levers and investment will be spread across five areas to:

·        Implement best practice across the business

·        Build and maintain 'fit for purpose' IT infrastructure and systems

·        Invest in show operations

·        Drive a performance culture

·        Build capability and talent

As part of creating a scalable platform, the Group will change its operating model and transition from a model organised and managed by geography to a more centralised one that supports a product-led business. As part of TAG the Group will develop an 'ITE way' creating a blueprint to run events that is consistent globally.

2)     Manage the Portfolio

The Group is implementing a more rigorous approach to allocation of capital. ITE currently runs 269 events and moving forward the Group will focus its capital resource on events that are market leading, or have the potential to be, delivering greater return on the Group's investment and time. 

Following the review, the Group has deliberately segmented its business into Core and Non-Core, enabling management to increase its focus on products that present the greatest opportunities whilst reducing distraction from smaller shows.

The Core shows are of strategic importance to our future and include the Group's largest shows, those with the greatest potential for growth and a number of smaller but strategically important shows. The Core shows currently represent 85% of revenue and 85% of profit. The Non-Core shows consist of smaller shows with less potential for growth.

As part of the Group's strategy, its top priority will be to apply a full suite of transformational levers to its Core events which present the best long-term growth opportunities and to realise their full potential. This will include investing in content to drive great customer experience, retention and pricing.

The Group will continue to pro-actively review its portfolio on an ongoing basis.

3)     Product-led Acquisitions

The Group will look to make selective product-led acquisitions to accelerate growth in line with strict M&A criteria. Each opportunity will be carefully reviewed but will not be limited to any particular geography or vertical as the Group aims to run the best shows in the best industries anywhere in the world.

TAG returns and funding

The Group has committed to investing up to £20 million over a three year period on the TAG Programme. This one-off cost will be split approximately one third in the current financial year, 2017, approximately 40% to 50% in 2018, and the remainder in 2019. This investment will cover both capital and operating expenditure. It is the intention to report one-off expenditure directly associated with the TAG Programme as an adjusting item, which will not affect headline results.

We anticipate a positive return on investment within three years and cash payback within four years.

Whilst we expect to continue to grow revenues, both headline PBT and EPS will be impacted in the current financial year - followed by anticipated flat or low growth in 2018 and anticipated double digit growth into 2019. This is due to the ongoing costs of running the new processes introduced across the programme, which will be reported within headline results.

The programme is designed to deliver mid-term sustainable high single digit revenue growth and high 20's operating margins. 

We plan to fund the programme from cash generated by our operations. Throughout the duration of the programme, the Group expects to maintain its net debt to EBITDA within a target range of 1.5 to 2 times.

2017-2020 Dividend

ITE intends to maintain its dividend cover of two times earnings throughout its planned investment period. The Board has announced an interim dividend this year of 1.5p (2016: 1.5p).

More detail will be provided at the Group's analyst presentation today and a recording of the event will be published in the investor relations section of ITE's website.

Outlook

Whilst we have seen a recent recovery in Moscow, market forecasts predict a much lower rate of growth than in the past. Trading conditions in other regions in which the Group operates continue to be challenging. Group revenues booked for 2017 are £136 million (at current exchange rates) representing circa 98% of market expectations for the full year. On a like-for-like basis these revenues are circa 5% ahead of this time last year, with trading volumes circa 2% lower. This improvement partly reflects earlier bookings following investment in the new initiatives introduced by management.  With this good visibility on current year bookings the Board remains confident in the full year outcome and in the Group's future prospects as it embarks on the next stage of its development.

Financial performance

Statutory results

Revenues for the first six months of the year were £69.6 million (2016: £63.6 million). The uplift in revenue includes the ABEC Acetech Bangalore and the Gehua Shanghai Hosiery events running for the first time under ITE's ownership, a favourable foreign exchange impact partly offset by the negative timing and biennial pattern affecting the first six months. In addition, underlying trading (excluding currency benefit) is up £1.4m representing like-for-like growth of 2%. This is the first period of growth after three years of difficult trading.

The impact of foreign exchange rates (both on overseas costs incurred in the period and overseas costs recognised in this period relating to events in future periods) almost entirely offsets the favourable impact of foreign exchange rates on revenues meaning there is no favourable impact on profits from the movement in exchange rates since last year.  

The average exchange rates over the first six months of the year are:

	Six months ended 31 March 2017	Six months ended 31 March 2016	Movement
Russian ruble	75.6	103.2	+27%
Turkish lira	4.3	4.3	-
Indian rupee	83.3	98.2	+15%

Reported pre-tax profits were £3.1 million (2016: £10.6 million). This is after including one-off restructuring costs of £2.3 million incurred in the first phase of the TAG programme, announced today. It also includes a net charge of £0.8 million (2016: net credit of £1.3 million) on the revaluation of our liabilities relating to completed acquisitions, which in the current period principally relates to the unwinding of the discounting applied to our equity option liabilities (£1.6 million), offset by the net revaluation of equity option liabilities and deferred and contingent consideration payable (£0.8 million). The movements primarily relate to the options to acquire the 40% shareholding of ABEC we do not currently own and earn out obligations on the ABEC and Fasteners acquisitions completed in the prior year.

Reported diluted earnings per share for the first six months were 0.6p (2016: 2.8p). The decrease in earnings per share is due to the reduction in profits in the period and also an increase in the Group's effective tax rate, which has increased due to an anticipated increase in withholding taxes on dividends from overseas entities as profits increase.

Headline results

In addition to the statutory results, headline results are presented, which are the statutory results after excluding a number of adjusting items, as the Board consider this to be the most appropriate way to measure the Group's underlying performance. We also report a like-for-like measure, on a constant currency basis adjusted to exclude acquisitions impacting results for the first time, event timing differences, biennial events and net finance costs. In addition to providing a more comparable set of results year-on-year, this is also in line with similar adjusted measures used by our peer companies and therefore facilitates comparisons across the industry.

Headline pre-tax profits for the first six months of the year were £15.4 million (2016: £19.0 million), in part as a result of the movement from a foreign exchange gain of £1.5 million in 2016 to a loss of £0.2 million in the current period. Underlying trading increased (£0.3 million) and foreign exchange (£0.2 million) and the first time impact of acquisitions (£0.5 million) both contributed to an increase, but these were offset by net biennials (£0.8 million), timing changes (£1.8 million) and increased net finance costs (£0.3 million). On a like-for-like basis, headline pre-tax profits are up 2%.

Headline diluted earnings per share for the first six months were 3.9p (2016: 5.2p), reflecting the reduced headline earnings in the period and the increase in the Group's effective tax rate, as detailed above.

The headline results are presented after excluding adjusting items consistent with those excluded in the year end annual report, but after also excluding restructuring costs. These are principally costs associated with designing and implementing the Group's TAG Programme, announced with the interim results today. The costs incurred to date relate to the design and diagnostic phase of the transformation programme, and further costs are expected during the remainder of the current financial year and across the subsequent two years as we move into the implementation and deployment phase.

The restructuring costs have been presented separately in order to report what the Board consider to be the most appropriate measure of underlying performance of the Group and to provide additional information to users of the interim report on the scale and progress of the Group's transformation programme.

The following table reconciles statutory profit/(loss) before tax to headline pre-tax profit:

	Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
	£000	£000	£000
Profit/(loss) on ordinary activities before taxation	3,130	10,616	(4,095)
Operating items
Amortisation of acquired intangible assets	7,832	7,603	15,468
Impairment of goodwill	-	1,236	24,650
Impairment of investments in associates and joint ventures	-	-	1,859
Restructuring costs	2,347	-	-
Transaction costs on completed and pending acquisitions	184	285	330
Profit on disposal of investments	-	(1,497)	(1,498)
Tax on income from associates and joint ventures	1,140	1,029	1,078
Financing items
Revaluation of liabilities on completed acquisitions	793	(316)	(1,288)
	__________	__________	__________
Headline pre-tax profit	15,426	18,956	36,504

Amortisation of acquired intangible assets relates to the amortisation charge in respect of intangible assets acquired through business combinations. Restructuring costs are the costs incurred in designing and implementing the Group's new strategy. Transaction costs on completed and pending acquisitions relates principally to costs incurred on the Gehua acquisition completed in December 2016. Tax on income from associates and joint ventures is an adjustment to ensure consistency with pre-tax operating profits.

Revaluation of liabilities on completed acquisitions include the losses from the revaluation of our equity options over non-controlling interests in our subsidiaries (charge of £0.5 million), principally in relation to ABEC, revaluations of deferred and contingent consideration (credit of £1.3 million), principally in relation to Fasteners, and the imputed interest charge on the unwinding of the discounting on the Group's equity option liabilities (charge of £1.6 million).

Cash flows

The Group's cash flow generated from operations over the first six months has improved to £21.8 million (2016: £18.0 million), and during the period £5.9 million has been applied to fund acquisitions and £5.4 million to dividends, resulting in the Group's net debt standing at £55.2 million at 31 March 2017 (2016: £69.6 million). Consistent with the comparative period, cash conversion for the first half was over 100%. During the period the Group negotiated a relaxation of our leverage covenant with our banks for the final three quarters of the current financial year, ending 30 September 2017.

Trading highlights and review of operations

During the period the Group organised 122 events (2016: 134 events) which generated actual revenue growth of 9%. Like-for-like revenues were 2% higher than for the same period last year.

Actual volume sales for the period were 325,200 sqm (2016: 340,100 sqm), reflecting the weaker biennial pattern, timing changes and weaker trading in Central Asia, Turkey and India, partially offset by the stabilisation of trading conditions in Moscow. Volume sales were 5% lower on a like-for-like basis in comparison to the same period last year.

A summary of the Group's revenue and gross profits for the period is set out below.

	Volume Sales sqm'000	Revenue £'m	Gross Profit £'m
First half 2016	340	63.6	27.6
Non-annual 2016	(19)	(2.9)	(1.0)
Annually recurring 2016	321	60.7	26.6
Acquisitions	26	3.3	0.9
FX Translation	-	5.8	1.5
Like-for-like change	(16)	1.4	0.1
Annually recurring 2017	331	71.2	29.1
Timing differences	(7)	(2.2)	(1.8)
Non-annual 2017	1	0.6	0.3
First half 2017	325	69.6	27.6

Russia

The economic situation in Moscow has continued to stabilise although the regional offices continue to experience tough trading conditions. Like-for-like volume sales in Moscow were 5% higher than the comparative period and across Russia were 1% higher than the comparative period.

Moscow's largest event in the first half was the Moscow International Travel & Tourism (MITT) event, which increased volume sales to 13,700 sqm (2016: 11,700 sqm) reflecting the return of Turkish exhibitors and an increase in other international and domestic stands. 

Central Asia

Trading in Central Asia remains challenging with like-for-like volume sales for the first six months 22% lower than for the comparative period.

The largest part of the Group's business in the region is Kazakhstan, which reported a 25% decrease in like-for-like volume sales. The largest event in the region is the Kazakhstan International Oil & Gas Exhibition (KIOGE), held in October 2016, which was smaller than this time last year at 3,700 sqm (2016: 5,800 sqm), reflecting the continued impact of the oil price and local currency devaluation on the region.

Eastern & Southern Europe

In Turkey, the Group has seen a reduction of 18% in like-for-like volumes due to the impact of regional unrest on the local economy resulting in a reduction in international interest in the region. The largest event taking place in the first half was the travel event EMITT, which achieved volumes of 23,300 sqm (2016: 26,700 sqm) against a worsening backdrop facing the Turkish tourist industry.

Ukraine grew like-for-like volumes by 37% but still represents less than 5% of Group profits.

Asia

Like-for-like volume sales for the first six months in Asia were 6% lower than for the comparative period.

The Group's large construction events in India were held before demonetisation occurred in November, but some of our smaller Indian events have subsequently been affected, with a small number of cancellations and postponements. Acetech Mumbai is the largest construction event in India and remained wall-bound in its venue, although Acetech Delhi saw volumes decrease by 7% to 19,000 sqm from 20,400 sqm.

Rest of the World

Africa Oil Week ran in October 2016 and, as expected, was adversely affected by the difficult trading conditions affecting the oil industry. There was still excellent representation from all usual participating companies, although many companies sent fewer delegates with a resulting impact on revenues of over 20%. The Breakbulk Americas event ran in September 2016 (and will run again in October 2017) and so does not - and will not - feature in the 2017 results. Trading has held firm for the mid-market focused fashion event, MODA, held at the NEC in Birmingham and volumes were slightly down on prior year, selling 14,400 sqm (2016: 15,000 sqm).

April trading

April is the largest trading month for the Group. Mosbuild (which will be renamed WorldBuild Moscow next year) has benefitted from the stabilisation of the Moscow economy and the increased sales focus on this event, resulting in volume improvement from 31,200 sqm last year to 34,300 sqm this year. In India, as anticipated, the Security Safety show has seen withdrawals as the impact of de-monetisation affects our events. In Turkey, also as anticipated, the Beauty Eurasia event was significantly smaller due to the uncertainty created by the constitutional referendum particularly impacting our April events.

Set out below are the results for the Group's principal events taking place in April 2017:

	2017 (sqm)	2016 (sqm)	Variance (%)
Mosbuild (Russia)	34,300	31,200	+10%
TransRussia (Russia)	7,400	7,100	+4%
ExpoElectronica (Russia)	8,200	7,600	+8%
Breakbulk Europe (Belgium)	7,000	6,600	+6%
Beauty Eurasia (Turkey)	6,000	8,500	-29%
Secutech (India)	6,200	7,200	-14%

Condensed Consolidated Income Statement

For the six months ended 31 March 2017

		Six months to 31 March 2017 (Unaudited)						Six months to 31 March 2016 (Unaudited)						Year ended 30 September 2016 (Audited)
		Headline		Adjusting items (note 3)		Statutory		Headline		Adjusting items (note 3)		Statutory		Headline		Adjusting items (note 3)		Statutory
Notes		£000		£000		£000		£000		£000		£000		£000		£000		£000
Revenue		69,588		-		69,588		63,645		-		63,645		134,422		-		134,422
Cost of sales		(42,016)		-		(42,016)		(36,082)		-		(36,082)		(75,862)		-		(75,862)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Gross profit		27,572		-		27,572		27,563		-		27,563		58,560		-		58,560
Other operating income		333		-		333		230		-		230		615		-		615
Administrative expenses		(15,607)		(10,363)		(25,970)		(13,523)		(7,627)		(21,150)		(26,203)		(40,809)		(67,012)
Foreign exchange (loss)/gain on operating activities		(246)		-		(246)		1,484		-		1,484		1,956		-		1,956
Share of results of associates and joint ventures		5,004		(1,140)		3,864		4,530		(1,029)		3,501		4,628		(1,078)		3,550
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Operating profit/(loss)		17,056		(11,503)		5,553		20,284		(8,656)		11,628		39,556		(41,887)		(2,331)
Investment revenue		283		1,309		1,592		402		1,495		1,897		554		6,940		7,494
Finance costs		(1,913)		(2,102)		(4,015)		(1,730)		(1,179)		(2,909)		(3,606)		(5,652)		(9,258)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Profit/(loss) on ordinary activities before taxation		15,426		(12,296)		3,130		18,956		(8,340)		10,616		36,504		(40,599)		(4,095)
Tax on profit/(loss) on ordinary activities	4	(3,466)		3,582		116		(3,364)		2,397		(967)		(7,059)		3,983		(3,076)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Profit/(loss) for the period		11,960		(8,714)		3,246		15,592		(5,943)		9,649		29,445		(36,616)		(7,171)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Attributable to:
Owners of the Company		10,208		(8,714)		1,494		13,095		(5,943)		7,152		27,289		(36,616)		(9,327)
Non-controlling interests		1,752		-		1,752		2,497		-		2,497		2,156		-		2,156
		_________		_________		_________		_________		_________		_________		_________		_________		_________
		11,960		(8,714)		3,246		15,592		(5,943)		9,649		29,445		(36,616)		(7,171)
		_________		_________		_________		_________		_________		_________		_________		_________		_________
Earnings per share (p)
Basic	6	3.9				0.6		5.2				2.8		10.7				(3.6)
Diluted	6	3.9				0.6		5.2				2.8		10.7				(3.6)
		_________		_________		_________		_________		_________		_________		_________		_________		_________

The results stated above relate to continuing activities of the Group.

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2017

		Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
		Unaudited	Unaudited	Audited
		£000	£000	£000
Profit/(loss) for the period attributable to shareholders		3,246	9,649	(7,171)
Cash flow hedges:
Movement in fair value of cash flow hedges		1,336	(3,474)	(7,042)
Fair value of cash flow hedges released to the income statement		(387)	(340)	(1,293)
Currency translation movement on net investment in subsidiary undertakings		5,276	3,788	17,414
		__________	__________	__________
		9,471	9,623	1,908
Tax relating to components of comprehensive income		(290)	693	1,669
		__________	__________	__________
Total comprehensive income for the period		9,181	10,316	3,577
		__________	__________	__________
Attributable to:
Owners of the Company		7,429	7,819	1,421
Non-controlling interests		1,752	2,497	2,156
		__________	__________	__________
		9,181	10,316	3,577
		__________	__________	__________

All items recognised in comprehensive income may be reclassified subsequently to the income statement.

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity

31 March 2017

Six month period ended 31 March 2017 (Unaudited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total		Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000		£000		£000
Balance as at 1 October 2016	2,621	20,629	2,746	457	(4,370)	115,450	(21,317)	(42,289)		(2,992)		70,935		25,427		96,362
Net profit for the period	-	-	-	-	-	1,494	-	-		-		1,494		1,752		3,246
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	5,276		-		5,276		-		5,276
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		1,336		1,336		-		1,336
Gain on effective portion of cash flow hedges recognised in / (released from) reserves	-	-	-	-	-	-	-	-		(387)		(387)		-		(387)
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		(290)		(290)		-		(290)
Total comprehensive income for the 6 month period ending 31 March 2017	-	-	-	-	-	1,494	-	5,276		659		7,429		1,752		9,181
Dividends	16	(16)	-	-	-	(5,350)	-	-		-		(5,350)		(112)		(5,462)
Exercise of share options	-	-	-	-	6	(6)	-	-		-		-		-		-
Share-based payments	-	-	-	-	-	143	-	-		-		143		-		143
Issue of shares	23	3,444	-	-	-	-	-	-		-		3,467		-		3,467
Tax debited to equity	-	-	-	-	-	12	-	-		-		12		-		12
Acquisition of subsidiary	-	-	-	-	-	-	-	-		-		-		4,636		4,636
Balance as at 31 March 2017	2,660	24,057	2,746	457	(4,364)	111,743	(21,317)	(37,013)		(2,333)		76,636		31,703		108,339

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity

31 March 2017

Six month period ended 31 March 2016 (Unaudited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total		Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000		£000		£000
Balance as at 1 October 2015	2,570	14,875	2,746	457	(4,825)	140,031	(16,843)	(59,703)		3,674		82,982		16,361		99,343
Net profit for the period	-	-	-	-	-	7,152	-	-		-		7,152		2,497		9,649
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	3,788		-		3,788		-		3,788
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		(3,474)		(3,474)		-		(3,474)
Gain on effective portion of cash flow hedges recognised in / (released from) reserves	-	-	-	-	-	-	-	-		(340)		(340)		-		(340)
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		693		693		-		693
Total comprehensive income for the 6 month period ending 31 March 2016	-	-	-	-	-	7,152	-	3,788		(3,121)		7,819		2,497		10,316
Dividends paid	-	-	-	-	-	(12,436)	-	-		-		(12,436)		(1,423)		(13,859)
Exercise of share options	-	-	-	-	5	(5)	-	-		-		-		-		-
Share-based payments	-	-	-	-	-	239	-	-		-		239		-		239
Tax debited to equity	-	-	-	-	-	(554)	-	-		-		(554)		-		(554)
Acquisition of subsidiary	-	-	-	-	-	-	(13,159)	-		-		(13,159)		17,086		3,927
Exercise put option on acquisition of non-controlling interest	-	-	-	-	-	(429)	1,215	-		-		786		(786)		-
Balance as at 31 March 2016	2,570	14,875	2,746	457	(4,820)	133,998	(28,787)	(55,915)		553		65,677		33,735		99,412

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity

31 March 2017

Year ended 30 September 2016 (Audited):
	Share Capital	Share Premium Account	Merger Reserve	Capital Redemption Reserve	ESOT Reserve	Retained Earnings	Put Option Reserve	Translation Reserve		Hedge Reserve		Total		Non Controlling interests		Total Equity
	£000	£000	£000	£000	£000	£000	£000	£000		£000		£000		£000		£000
Balance as at 1 October 2015	2,570	14,875	2,746	457	(4,825)	140,031	(16,843)	(59,703)		3,674		82,982		16,361		99,343
Net (loss)/profit for the year	-	-	-	-	-	(9,327)	-	-		-		(9,327)		2,156		(7,171)
Currency translation movement on net investment in subsidiary undertakings	-	-	-	-	-	-	-	17,414		-		17,414		-		17,414
Movement in fair value of cash flow hedges	-	-	-	-	-	-	-	-		(7,042)		(7,042)		-		(7,042)
Fair value of cash flow hedges released to the income statement	-	-	-	-	-	-	-	-		(1,293)		(1,293)		-		(1,293)
Tax relating to components of comprehensive income	-	-	-	-	-	-	-	-		1,669		1,669		-		1,669
Total comprehensive income for the year ended 30 September 2016	-	-	-	-	-	(9,327)	-	17,414		(6,666)		1,421		2,156		3,577
Dividends	5	(5)	-	-	-	(15,594)	-	-		-		(15,594)		(1,520)		(17,114)
Exercise of share options	-	-	-	-	455	(452)	-	-		-		3		-		3
Share-based payments	-	-	-	-	-	390	-	-		-		390		-		390
Issue of shares	46	5,759	-	-	-	449	-	-		-		6,254		-		6,254
Tax debited to equity	-	-	-	-	-	(16)	-	-		-		(16)		-		(16)
Acquisition of subsidiary	-	-	-	-	-	-	(13,159)	-		-		(13,159)		17,084		3,925
Exercise put option on acquisition of subsidiary	-	-	-	-	-	(31)	8,685	-		-		8,654		(8,654)		-
Balance as at 30 September 2016	2,621	20,629	2,746	457	(4,370)	115,450	(21,317)	(42,289)		(2,992)		70,935		25,427		96,362

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Statement of Financial Position

31 March 2017

		31 March 2017	31 March 2016	30 September 2016
		Unaudited	Unaudited	Unaudited
	Notes	£000	£000	£000
Non-current assets
Goodwill	8	112,624	110,722	97,855
Other intangible assets	9	71,046	74,684	70,816
Property, plant & equipment		2,857	2,432	2,469
Interests in associates and joint ventures	10	49,724	50,224	45,677
Venue advances and other loans		3,767	3,148	2,945
Derivative financial instruments	14	8	152	-
Deferred tax asset		4,320	3,624	3,070
		___________	___________	___________
		244,346	244,986	222,832
Current assets
Trade and other receivables	11	59,471	44,661	50,610
Tax prepayment		375	249	2,115
Derivative financial instruments	14	15	882	-
Cash and cash equivalents		15,795	13,476	15,508
		___________	___________	___________
		75,656	59,268	68,233
Total assets		320,002	304,254	291,065
Current liabilities
Trade and other payables	12	(21,221)	(16,859)	(20,844)
Deferred income		(80,115)	(57,766)	(61,918)
Derivative financial instruments	14	(21,875)	(14,506)	(5,904)
Provisions		(269)	(291)	(240)
		___________	___________	___________
		(123,480)	(89,422)	(88,906)
Non-current liabilities
Bank loan	13	(70,966)	(83,092)	(74,604)
Provisions		(168)	(655)	(189)
Deferred tax liabilities		(13,848)	(15,295)	(12,675)
Derivative financial instruments	14	(3,201)	(16,378)	(18,329)
		___________	___________	___________
		(88,183)	(115,420)	(105,797)
Total liabilities		(211,663)	(204,842)	(194,703)
		___________	___________	___________
Net assets		108,339	99,412	96,362
		___________	___________	___________
Equity
Share capital	15	2,660	2,570	2,621
Share premium account		24,057	14,875	20,629
Merger reserve		2,746	2,746	2,746
Capital redemption reserve		457	457	457
ESOT reserve		(4,364)	(4,820)	(4,370)
Retained earnings		111,743	133,998	115,450
Put option reserve		(21,317)	(28,787)	(21,317)
Translation reserve		(37,013)	(55,915)	(42,289)
Hedge reserve		(2,333)	553	(2,992)
		___________	___________	___________
Equity attributable to equity holders of the parent		76,636	65,677	70,935
Non-controlling interest		31,703	33,735	25,427
		___________	___________	___________
Total equity		108,339	99,412	96,362
		___________	___________	___________

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Condensed Consolidated Cash Flow Statement

For the six months ended 31 March 2017

		Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
	Notes	Unaudited	Unaudited	Audited
		£000	£000	£000
Cash flows from operating activities
Operating profit/(loss) from continuing operations		5,553	11,628	(2,331)
Adjustments for non-cash items:
Depreciation and amortisation		8,953	8,429	17,191
Impairment of goodwill	3	-	1,236	24,650
Impairment of investments in associates and joint ventures	3	-	-	1,859
Share-based payments		143	239	390
Share of profit from associates and joint ventures		(3,864)	(3,501)	(3,550)
Decrease in provisions		(30)	(41)	(69)
Gain on disposal of property, plant and equipment		-	-	(1)
Foreign exchange loss/(gain) on operating activities		246	(1,484)	(1,956)
Profit on disposal of investments		-	(1,497)	(1,498)
Fair value of cash flow hedges recognised in the income statement		(379)	(171)	(1,187)
Dividends received from associates and joint ventures		620	1,295	5,373
Operating cash flows before movements in working capital		11,242	16,133	38,871
(Increase)/decrease in receivables		(7,778)	1,668	(4,254)
Venue advances and loans		(2,500)	(1,101)	(2,867)
Utilisation & repayment of venue loans		2,077	1,349	3,901
Increase in deferred income		18,197	7,935	12,087
Increase/(decrease) in payables		599	(7,994)	(6,735)
Cash generated from operations		21,837	17,990	41,003
Tax paid		(2,608)	(2,103)	(6,668)
Net cash from operating activities		19,229	15,887	34,335
Investing activities
Interest received		283	233	385
Investment in associates and joint ventures		-	(1,684)	(2,397)
Acquisition of businesses - cash paid		(6,225)	(16,167)	(17,185)
Cash acquired through acquisitions		343	3,403	3,404
Purchase of property, plant and equipment and computer software		(1,512)	(1,388)	(2,419)
Disposal of plant, property and equipment and computer software		10	23	112
Cash paid to acquire non-controlling interests		-	(1,874)	(2,087)
Net cash flows from investing activities		(7,101)	(17,454)	(20,187)
Financing activities
Equity dividends paid		(5,368)	(12,427)	(15,589)
Dividends paid to non-controlling interests		(112)	(1,423)	(1,520)
Interest paid and bank charges		(1,913)	(1,730)	(3,544)
Proceeds from the issue of share capital & exercise of share options		-	-	3
Repayment/(drawdown) of borrowings		(3,570)	13,476	4,988
Net cash flows from financing activities		(10,963)	(2,104)	(15,662)
Net increase/(decrease) in cash and cash equivalents		1,165	(3,671)	(1,514)
Net cash and cash equivalents at beginning of period		15,508	17,269	17,269
Effect of foreign exchange rates on cash and cash equivalents		(878)	(122)	(247)
Net cash and cash equivalents at end of period		15,795	13,476	15,508

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Net debt reconciliation

For the six months ended 31 March 2017

	At 1 October 2016	Cash flow	Foreign exchange	At 31 March 2017
	£000	£000	£000	£000
Cash	15,508	1,165	(878)	15,795
Bank loan	(74,604)	3,570	68	(70,966)
Net debt	(59,096)	4,735	(810)	(55,171)

Notes 1 to 18 form an integral part of the condensed consolidated financial statements.

Notes to the Interim Financial Statements

1. General Information and basis of preparation

The information for the year ended 30 September 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The annual financial statements of ITE Group plc are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

Accounting policies

The interim financial statements have been prepared on the basis of the accounting policies and methods of computation applicable for the year ended 30 September 2016.  These accounting policies are consistent with those applied in the preparation of the accounts for the year ended 30 September 2016 except as described below.

No new standards, amendments to standards and interpretations have been adopted and applied in the period.

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

·      Amendments to IAS 7 Statement of cash flows

·      Amendments to IFRS 2 Share-based payments

·      Clarifications to IFRS 15 Revenue from contracts with customers

·      IFRS 9 Financial instruments

·      IFRS 15 Revenue from contracts with customers

·      Amendments to IAS 12 Income taxes

·      IFRS 16 Leases

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group, with the exception of the adoption of IFRS 16 Leases, which will replace the current leasing standard, IAS 17 Leases.

IFRS 16 requires all leases to be treated in a consistent way to the current rules on finance leases. This will result in all leases being disclosed in the Statement of Financial Position, with the exception of short-term leases, where, for lease terms of less than 12 months, an election can be made to account for the expense in line with the payment terms.

This is expected to have a significant impact on both the Group's Statement of Financial Position, as there will be an increase in lease assets and financial liabilities recognised, and the Group's Income Statement, through a changing of the expense profile and the financial statement lines in which the expenses are recognised. The adoption of IFRS 16 will increase the expense charged at the beginning of our lease contracts, due to the straight-line operating lease expense charge being replaced by the finance cost approach, which, by its nature is front-loaded. Currently, our operating lease rentals are recognised within administrative expenses, but under IFRS 16, these will be classified as finance costs and therefore operating profit is expected to increase on adoption. The financial impact of the changes have yet to be quantified by management.

1. Segmental information

IFRS 8 introduced the term Chief Operating Decision Maker (CODM). The Executive Management Team is considered to be the CODM and consists of the Chief Executive Officer, Chief Financial Officer, Strategy Director, HR Director, Marketing Director, Company Secretary, and the Regional Managing Director for each of our key regions.

ITE's reportable segments are strategic business units that are based in different geographic locations and managed separately. The products and services offered by each business unit are identical across the Group.

ITE Group evaluates performance on the basis of headline profit or loss from operations before tax.

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

Six months ended 31 March 2017 Unaudited	Russia	Central Asia	Eastern & Southern Europe	Asia	Rest of the World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	30,846	8,622	6,837	14,146	9,137	69,588
Headline pre-tax profit/(loss)	11,252	1,941	1,672	7,729	(7,168)	15,426
Operating profit/(loss)	10,637	1,700	(648)	4,322	(10,458)	5,553
	________	________	________	________	________	_______
By origin of sale
Revenue	23,085	5,402	5,981	16,580	18,540	69,588
Headline pre-tax profit/(loss)	6,509	1,064	622	8,576	(1,345)	15,426
Operating profit/(loss)	5,894	823	(1,699)	5,169	(4,634)	5,553
	________	________	________	________	________	_______
Operating profit						5,553
Investment revenue						1,592
Finance costs						(4,015)
						_______
Profit before tax						3,130
Tax						116
						_______
Profit after tax						3,246
						________
Capital expenditure	52	28	154	405	873	1,512
Depreciation and amortisation	792	301	2,380	2,288	3,192	8,953
Balance Sheet
Assets *	49,434	14,543	36,872	131,598	82,860	315,307
	________	________	________	________	________	________
Liabilities *	(40,962)	(6,540)	(29,269)	(38,033)	(83,011)	(197,815)
	________	________	________	________	________	________

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

The revenue in the period of £69.6 million includes £0.2 million of barter sales.

Included within the headline pre-tax loss and operating loss of Rest of the World is £8.0 million and £8.9 million respectively of corporate costs. 

Six months ended 31 March 2016 Unaudited	Russia	Central Asia	Eastern & Southern Europe	Asia	Rest of the World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	25,165	9,322	5,582	10,651	12,925	63,645
Headline pre-tax profit/(loss)	10,421	2,956	394	6,107	(922)	18,956
Operating profit/(loss)	8,157	2,724	(1,911)	4,726	(2,068)	11,628
	________	________	________	________	________	_______
By origin of sale
Revenue	16,992	4,613	6,513	12,694	22,833	63,645
Headline pre-tax profit	4,263	869	852	7,831	5,141	18,956
Operating profit/(loss)	1,999	637	(1,453)	6,450	3,995	11,628
	________	________	________	________	________	_______
Operating profit						11,628
Investment revenue						1,897
Finance costs						(2,909)
						_______
Profit before tax						10,616
Tax						(967)
						_______
Profit after tax						9,649
						________
Capital expenditure	503	12	77	154	642	1,388
Depreciation and amortisation	1,250	333	2,308	1,512	3,026	8,429
Balance Sheet
Assets *	36,586	12,471	42,205	125,011	84,108	300,381
	________	________	________	________	________	________
Liabilities *	(17,378)	(5,105)	(27,454)	(20,674)	(118,464)	(189,075)
	________	________	________	________	________	________

* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities

The revenue in the period of £63.6 million includes £0.3 million of barter sales.

Included within the headline pre-tax profit/(loss) and operating profit/(loss) of Rest of the World is £6.8 million and £5.7 million respectively of corporate costs.  Included within the headline pre-tax profit and operating profit of Asia is £3.5m of profit from associates.  Included within the operating profit of Russia is an impairment charge of £1.2 million in respect of Siberian goodwill.

Year ended 30 September 2016 Audited	Russia	Central Asia	Eastern & Southern Europe	Asia	Rest of the World	Total Group
	£000	£000	£000	£000	£000	£000
By geographical location of events/activities
Revenue	50,851	21,980	19,294	18,075	24,222	134,422
Headline pre-tax profit/(loss)	20,316	7,309	5,855	4,888	(1,864)	36,504
Operating profit/(loss)	17,074	6,841	1,217	(23,545)	(3,918)	(2,331)
	________	________	________	________	________	_______
By origin of sale
Revenue	33,647	11,946	20,185	23,619	45,025	134,422
Headline pre-tax profit	9,883	3,402	6,532	11,729	4,958	36,504
Operating profit/(loss)	6,641	2,933	1,895	(16,703)	2,903	(2,331)
	_______	________	________	________	_______	_______
Operating loss						(2,331)
Investment revenue						7,494
Finance costs						(9,258)
						_______
Loss before tax						(4,095)
Tax						(3,076)
						_______
Loss after tax						(7,171)
						________
Capital expenditure	722	58	100	253	1,286	2,419
Depreciation and amortisation	2,458	611	4,674	3,309	6,139	17,191
Balance Sheet
Assets *	46,054	12,110	41,013	102,479	84,361	286,017
	________	________	________	________	________	________
Liabilities *	(26,208)	(4,194)	(25,951)	(17,459)	(106,210)	(180,022)
	________	________	________	________	________	________
Non-current assets*	30,250	5,025	29,684	85,149	69,654	219,762
	________	________	________	________	________	________

* Segment assets and segment liabilities exclude current and deferred tax assets and liabilities

The revenue in the year of £134.4 million includes £0.4 million of barter sales.

Included within the headline pre-tax profit/(loss) and operating profit/(loss) of Rest of the World is £13.1 million and £10.6 million respectively of corporate costs.

3. Adjusting items

The following (charges)/credits have been presented as adjusting items:

	Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
	Unaudited	Unaudited	Audited
	£000	£000	£000
Operating items
Amortisation of acquired intangible assets	(7,832)	(7,603)	(15,468)
Impairment of goodwill	-	(1,236)	(24,650)
Impairment of investments in associates and joint ventures	-	-	(1,859)
Profit on disposal of investments	-	1,497	1,498
Restructuring costs	(2,347)	-	-
Transaction costs on completed and pending acquisitions	(184)	(285)	(330)
	___________	___________	___________
Administrative expenses	(10,363)	(7,627)	(40,809)
Tax on income from associates and joint ventures	(1,140)	(1,029)	(1,078)
Financing items
Revaluation of liabilities on completed acquisitions	(793)	316	1,288
Taxation
Tax related to adjusting items	2,442	1,368	2,905
Tax on income from associates and joint ventures	1,140	1,029	1,078
	___________	___________	___________
	(8,714)	(5,943)	(36,616)
	___________	___________	___________

4. Taxation

	Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax
UK corporation tax	37	59	812
Foreign tax	2,064	1,981	5,682
	__________	__________	__________
	2,101	2,040	6,494
Deferred tax	(2,217)	(1,073)	(3,418)
	__________	__________	__________
Tax on profit on ordinary activities	(116)	967	3,076
	__________	__________	__________

Tax at the interim is charged on pre-tax profits, including those of associates and joint ventures, at a rate of 24% (2016: 18%) representing the best estimate of the weighted average annual corporation tax expected for the financial year adjusted for discrete items in the interim period.

5. Dividends

	Six months to 31 March 2017			Six months to 31 March 2016			Year ended 30 September 2016
	Unaudited			Unaudited			Audited
	Per share p	Settled in cash £000	Settled in scrip £000	Per share p	Settled in cash £000	Settled in scrip £000	Per share p	Settled in cash £000	Settled in scrip £000
Amounts recognised as distributions to equity holders in the period:
Final dividend in respect of the year ended 30 September 2016	3.0	5,350	2,497	-	-	-	-	-	-
Interim dividend in respect of the year ended 30 September 2016	-	-	-	-	-	-	1.5	3,158	720
Final dividend in respect of the year ended 30 September 2015	-	-	-	4.9	12,436	-	4.9	12,436	-
	______________	______________	______________	_____________	___________________	_____________	______________	____________________	_____________
	3.0	5,350	2,497	4.9	12,436	-	6.4	15,594	720
	\===	\===	\====	\===	\====	\===	\===	\====	\===

The Directors have proposed an interim dividend for the year ending 30 September 2017 of 1.5p per ordinary share, a distribution of approximately £3.9 million. The proposed dividend has been approved by the Board and has not been included as a liability as at 31 March 2017. A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares.

6. Earnings per share

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

	Six months to 31 March 2017	Six months to 31 March 2016	Year ended 30 September 2016
	Number of shares ('000) Unaudited	Number of shares ('000) Unaudited	Number of shares ('000) Audited
Weighted average number of shares:
For basic earnings per share	261,081	253,806	255,598
Dilutive effect of exercise of share options	168	328	79
	________	________	________
For diluted earnings per share	261,249	254,134	255,677

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 £1.5 million (31 March 2016: £7.2 million; 30 September 2016: loss of £9.3 million). Basic and diluted earnings per share were 0.6p and 0.6p respectively (31 March 2016: 2.8p and 2.8p respectively; 30 September 2016: (3.6)p and (3.6)p respectively).

Headline earnings per share

The calculations of headline basic and diluted earnings per share are based on the headline profit for the financial year attributable to equity holders of the parent of £10.2 million (31 March 2016: £13.1 million; 30 September 2016: £27.3 million). Headline basic and diluted earnings per share were 3.9p and 3.9p respectively (31 March 2016: 5.2p and 5.2p respectively; 30 September 2016: 10.7p and 10.7p respectively).

7. Acquisition of businesses

Gehua

On 9 December 2016, ITE's wholly owned subsidiary, ITE Asia Exhibitions Limited, acquired a 70% holding in ITE Gehua Exhibitions Co Ltd ("Gehua"), a company incorporated in Shanghai, for consideration of £10.8 million.

Gehua is a Shanghai-based business, founded in 2001, that runs a portfolio of complementary exhibitions in China spanning Textile and Clothing, Auto Parts and Accessories, Mechanical Equipment, Gifts, and Food - attracting both domestic and international exhibitors and visitors.

During the period the Group incurred transaction costs on the Gehua acquisition of £0.1 million, which are included within administrative expenses.

Details of the fair values of the net assets acquired, and the goodwill arising, are presented as follows:

Assets acquired	Fair value £000
Intangible fixed assets - Trademarks (note 9)		2,983
Intangible fixed assets - Customer relationships (note 9)		4,451
Trade and other receivables		1,811
Cash and cash equivalents		343
Current liabilities		(2,058)
Deferred tax liabilities		(1,859)
		5,671
Non-controlling interest		(4,636)
Net assets acquired		1,035
Goodwill arising on acquisition (note 8)		9,782
Total cost of acquisition		10,817

Satisfied by
Cash consideration		5,951
Share consideration		3,500
Contingent consideration		1,366
		10,817
Net cash outflow arising on acquisition
Cash consideration paid		5,951
Cash and cash equivalents acquired		(343)
		5,608

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 12 months of the acquisition date.

Goodwill arising on acquisition of £9.8 million reflects the strategic value in increasing the Group's presence in China and the expected synergies with the Group's existing industry sectors and Chinese operations. None of the acquired goodwill and intangibles are expected to qualify for tax deductions in the UK.

The acquired business has contributed £0.9 million to Group revenue and a profit of £0.3 million since acquisition. If the acquisition had occurred on 1 October 2016 it would have contributed £2.2 million to revenue and £1.0 million to profit.

8.  Goodwill

	Total £000
At 1 October 2016	97,855
Additions in the period (note 7)	9,782
Exchange differences	4,987
	_________
At 31 March 2017	112,624
	_________

9.  Other intangible assets

	Total £000
At 1 October 2016	70,816
Additions through business combinations (note 7)	7,434
Additions	780
Disposals	(1)
Amortisation of acquired intangibles	(7,832)
Amortisation of computer software	(528)
Exchange differences	377
	_________
At 31 March 2017	71,046
	_________

10. Interests in associates and joint ventures

	Total £000
At 1 October 2016	45,677
Share of results of associates and joint ventures	3,864
Dividends received	(620)
Foreign exchange	803
	_________
At 31 March 2017	49,724
	_________

11.  Trade and other receivables

	31 March 2017 Unaudited	31 March 2016 Unaudited	30 September 2016 Audited
	£000	£000	£000
Trade receivables	37,171	25,022	32,499
Other receivables	3,708	5,391	3,634
Venue advances and prepayments	3,923	3,455	3,322
Prepayments and accrued income	14,669	10,793	11,155
	___________	___________	___________
	59,471	44,661	50,610
	___________	___________	___________

12.  Trade and other payables

	31 March 2017 Unaudited	31 March 2016 Unaudited	30 September 2016 Audited
	£000	£000	£000
Trade payables	2,210	2,176	2,699
Taxation and social security	1,925	1,294	2,776
Other payables	4,021	3,349	3,469
Accruals	9,365	7,658	8,075
Deferred consideration	1,777	1,161	1,654
Contingent consideration	1,923	1,221	2,171
	___________	___________	___________
	21,221	16,859	20,844
	___________	___________	___________

13.  Bank loan and overdraft

The bank loan is a £93.0 million multi-currency committed bank facility that provides revolving credit facilities through to 31 March 2019.  Total drawdowns under the facility of £71.0 million at 31 March 2017 were denominated in Sterling (£68.1 million) and US Dollars (£2.9 million). At 31 March 2017 the Group had £22.0 million (March 2016: £9.9 million) of undrawn committed facilities. 

All borrowings are arranged at floating interest rates, thus exposing the Group to interest rate risk. The Group uses interest rate swaps to mitigate this risk, hedging £40.0 million of the debt (31 March 2016: £nil; 30 September 2016: £40.0 million), reducing the exposure to fluctuations in interest rates. All borrowings are secured by a guarantee between a number of Group companies.

14. Derivative financial instruments

Derivative financial instruments are classified according to the following categories in the table below.  The Group's derivative financial instruments are categorised into levels to reflect the degree to which observable inputs are used for determining their fair value.  The Group's foreign currency forward contracts are classified as Level 2, while the equity and put options are classified as Level 3.

	31 March 2017 Unaudited		31 March 2016 Unaudited		30 September 2016 Audited
	Notional	Fair value	Notional	Fair value	Notional	Fair value
	£000	£000	£000	£000	£000	£000
Current assets
Foreign currency forward contracts	3,276	15	16,413	882	-	-
Equity options	2,548	-	-	-	-	-
	_________	_________	_________	_________	_________	________
	5,824	15	16,413	882	-	-
Non-current assets
Foreign currency forward contracts	3,621	8	5,262	152	-	-
Equity options	910	-	2,675	-	3,016	-
	_________	_________	_________	_________	_________	________
	4,531	8	7,937	152	3,016	-
Current liabilities
Foreign currency forward contracts	15,346	1,356	4,162	231	22,177	1,284
Equity options	23,067	20,519	14,275	14,275	4,620	4,620
	_________	_________	_________	_________	_________	________
	38,413	21,875	18,437	14,506	26,797	5,904
Non-current liabilities
Foreign currency forward contracts	12,285	802	14,057	896	23,427	1,976
Equity options	3,118	2,208	18,156	15,482	18,968	15,951
Interest rate swaps	191	191	-	-	402	402
	_________	_________	_________	_________	_________	________
	15,594	3,201	32,213	16,378	42,797	18,329

Level 1 fair values are measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair values are measured using inputs, other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. Level 3 fair values are measured using inputs for the asset or liability that are not based on observable market data.

For the Group's Level 3 financial instruments the fair values are determined using standard valuation models based on discounted cash flow projections. The fair values of unobservable inputs are sensitive to changes in discount rates and future cash flow projections.

The following table shows the movements in the Group's equity option liabilities during the period:

	Total £000
At 1 October 2016	20,571
Unwind of discount	1,572
Revaluation	530
Exchange differences recognised in other comprehensive income	54
	_________
At 31 March 2017	22,727
	_________

The Group utilises foreign currency forward contracts to hedge future euro denominated sales made from the UK.  The Group is party to foreign currency forward contracts in the management of its exchange rate exposures.  The instruments purchased are denominated in Euros which represents the Group's primary billing currency. Under the forward contracts, the Group has an obligation to sell Euros for Sterling at specified rates at specified dates. 

The foreign currency forward contracts as at 31 March 2017 cover exchange exposures over the next 36 months.   These instruments have been designated in hedging relationships, with any changes in their fair value being recorded in equity.

15. Share capital

	31 March 2017 Unaudited	31 March 2016 Unaudited	30 September 2016
	£000	£000	Audited £000
Authorised
375,000,000 ordinary shares of 1 penny each (31 March 2016: 375,000,000; 30 September 2016: 375,000,000)	3,750	3,750	3,750
	__________	__________	__________
Allotted and fully-paid
266,044,865 ordinary shares of 1 penny each (31 March 2016: 256,973,631; 30 September 2016: 262,139,673)	2,660	2,570	2,621
	__________	__________	__________

During the period, the Group issued 2,299,379 shares of 1p each as part of the consideration paid to acquire a 70% shareholding in Gehua. The Company announced a scrip dividend alternative for the year ended 30 September 2016 final dividend, allowing shareholders to elect to receive their dividend in the form of new ordinary shares. As a result of this, 1,605,813 new ordinary shares of 1p each were issued. During the period, no ordinary shares of 1p each (2016: nil) were allotted pursuant to the exercise of share options.

The Company has one class of ordinary shares which carry no right to fixed income.

16. Events after the balance sheet date

There were no material events occurring after the balance sheet date.

17. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions with key management personnel will be disclosed in the Group's Annual Report for the year ended 30 September 2017.  Transactions between the Group and its associates, where relevant, are disclosed below.

Trading transactions with associates

During the period ended 31 March 2017 the Group charged management fees of £0.2 million (2016: £nil) to Sinostar ITE, the Group's joint venture operation in Hong Kong and China.

18.          Principal risks and uncertainties

The following principal risks and uncertainties disclosed in the 2016 Annual Report have not changed during the period:

·      Political uncertainty and regulatory risk

·      Economic instability reduces demand for exhibition space

·      Financial risk - foreign currency risk  

·      Financial risk - liquidity risk  

·      Financial risk - covenant risk

·      Commercial relationships

·      Venue availability

·      Competitor risk

·      Integration and management of acquisitions

·      People

Refer to pages 43-46 of the 2016 Annual Report for details of the potential impact and mitigating actions in place for each of these risks.

In addition to the above risks, one additional risk has been identified in the period, as follows:

Business Transformation Risk

Potential Impact

Today the Group begins a significant transformation programme aimed at transforming the nature and focus of the business. As with any transformation programme, the nature, scale, processes, information technology and people will at times be significantly impacted and changed.  This brings with it a significant level of execution risk, which may lead to either delay or increased cost of the programme.

Mitigation

The risk of delay and increased costs of the programme are mitigated by the Transformation Steering Committee and processes implemented by the management team. This is chaired by our Director of Transformation, who has significant relevant experience of change and brings together key individuals from across the business to monitor the programme. Further the Board and Executive Management Team have significant oversight of the programme.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Interim Management Report. The financial position of the Group, its cash flows and liquidity position are described in the financial statements and notes. The Group has the financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. The Group operates in territories that can be unpredictable and unexpected geopolitical and economic events such as attempted coups, acts of terrorism, sanctions, currency controls and exchange rate movements can have an impact on the Group's reported trading performance. A significant deterioration in trading from the major markets (notably Russia and Turkey) could impact on certain banking covenants.  However, the Directors have a range of mitigating actions available and within their control. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis in preparing the interim report and financial statements.

Responsibility statement

We confirm that to the best of our knowledge:

(a)   the condensed set of interim financial statements, which have been prepared in accordance with IAS 34 "Interim Financial Reporting" give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;

(b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact, and description of principal risks and uncertainties for the remaining six months of the financial year); and

(c)    the interim management report includes a fair review of the information required regarding related party transactions (under DTR 4.2.8R).

By the order of the board

Chief Executive Officer

Mark Shashoua

16 May 2017

Independent Review Report to ITE Group plc

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of financial position, the condensed consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

16 May 2017

Directors and professional advisers

Directors	Marco Sodi, non-executive Chairman Mark Shashoua, Chief Executive Officer Andrew Beach, Chief Financial Officer Neil England, non-executive Director Linda Jensen, non-executive Director Stephen Puckett, non-executive Director Sharon Baylay, non-executive Director
Company Secretary	Anneka Kingan
Registered office	ITE Group plc, 105 Salusbury Road, London, NW6 6RG
Registration number	1927339
Auditor	Deloitte LLP, 2 New Street Square, London, EC4A 3BZ
Solicitors	Olswang, 90 High Holborn, London, WC1V 6XX
Principal Bankers	Barclays Bank plc, 1 Churchill Place, London, E14 5HP HSBC Bank plc, 60 Queen Victoria Street, London, EC4N 4TR
Company Brokers	Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT
Registrars	Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
Public Relations	FTI Consulting Limited, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD
Website	www.ite-exhibitions.com

Financial calendar

The Group's financial calendar can be found at http://www.ite-exhibitions.com/Financial-Calendar.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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