ITE Group’s continued spend in Russia and the surrounding region has been reflected in revenues of £155.5m (2010: £113.5m) and profit before tax of £39.1m (2010: £31.3m) for the year to 30 September.
Preliminary results show contributions made from new acquisitions, costing the company almost £50m throughout the year, have bolstered ITE’s efforts in the region where the company made its name.
ITE Group remains one of the exhibition industry’s more acquisitive companies throughout the global economic downturn. In March it acquired an exhibition business based in Krasnodar, and earlier this week extended its presence in the growing regional markets of Russia with the acquisition of Ukraine-based organiser Autoexpo, owner of 10 exhibitions including the Kiev Motor Show, through subsidiary Premier Expo.
ITE acquired MVK, primarily a Moscow exhibition business, in December 2010, and in July 2011 bought 60 per cent of Turkish construction event YAPIbuild.
The acquisitions are reflected in the company’s net cash decline of £23m to £5.5m, a confident move given most companies preference to hoard cash in anticipation of continued economic difficulties in Europe. ITE, however, claims its results demonstrate the impact of a return to economic growth in its key (Russian and former Soviet states) markets, provide validation for its continued spend in the region.
"ITE has delivered record results reflecting a strong operational performance as we execute against our stated strategy,” said CEO of ITE Group Russell Taylor (pictured). “Over the year, we have seen a return of economic growth in our core markets, and have invested for future growth by acquiring three complementary businesses, which add strength and breadth to our existing portfolio of events.”
Taylor added that the Moscow exhibition market accounts for 51 per cent of the group's annual revenues, reflected in its like-for-like volume sales with a 15 per cent increase over last year. "These acquisitions and the reported return to economic growth in its markets have helped ITE to become a broader and stronger business."
However, while ITE does count its largest biennial event, the Moscow International Oil and Gas Exhibition, among its Russian events, it also faces growing competition in the country, not least from the debut of Buildex 2012, a rival to ITE’s Mosbuild construction expo being launched by Messe Munich international subsidiary IMAG in Moscow next April. The event premieres at the Crocus Expo International Exhibition Centre during the first week of Mosbuild, held at Moscow’s Expocentre and its impact on ITE’s result next year remains to be seen.
ITE claims the recovery in St Petersburg lags Moscow by six months but showed marked improvement over the previous year, with volume sales up 20 per cent and revenues up by 14 per cent. This was exemplified best by a strong return to growth for construction event Interstroyexpo, which improved its volume sales by 34 per cent to 8,600m2 (2010: 6,400m2).
In its statement, ITE confirmed it will be looking to take advantage of St Petersburg’s new ExpoForum Convention and Exhibition Centre development, due for completion in 2014.
Recent acquisitions have resulted in the group’s reduced gross margin of 48 per cent, a knock-on effect of the addition of lower yielding event portfolios in the newly acquired businesses. The additional overhead costs associated with adding two large portfolios of events contributed to an increase in administrative expenses before amortisation costs to £24.1m (2010: £19.9m). The net impact of these changes on operating profit margins (before amortisation and transaction costs) is a marginal increase from 32 per cent to 33 per cent.
Revenues booked for 2012, at £93m, are eight per cent up on last year on a like-for-like basis.
The result is seemingly good news for investors, with headline diluted earnings per share of 16.6 pence providing a 43 per cent improvement on last year's comparable figure of 11.6 pence per share. Fully diluted earnings per share was 12.6 pence (2010: 9.8 pence).
“ITE operates in resilient markets and has made a good start to the current financial year. Trading is in line with our expectations and we are well placed to continue our growth, both organically and through selective acquisitions," said Taylor.
Former ITE Group co-founder Mark Shashoua is putting his feet firmly back into the UK and global exhibition industry as the new group MD of Emap Connect.
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