WORLD – International exhibition organiser, ITE Group has reported its first-half headline pre-tax profits slipped 3.9 per cent, after difficult trading conditions in Russia had “now stabilised”.
The group, which organises more than 240 conferences and exhibitions annually, has diversified its portfolio to reduce its reliance on the troubled region.
As previously reported in EW's sister publication EN, about half of ITE's events were staged in Russia and the Ukraine.
The firm's revenue fell 21.2 per cent to £56.1m (US$86.8m) from £71.2m (US$110.2m) for the period up to 31 March 2015, due to weaker exchange rates, a weaker biennial pattern and a slowdown in business within Russia and the Ukraine.
Chief executive Russell Taylor told EW the group was focusing on Africa as an emerging market for conferences and events.
“It will be a time before exhibition becomes a massive growth area, but it’s clearly one of the great unexploited (regions),” Taylor said.
“Russia, next year, will be about 40 per cent of our business and we’ve got a nice spread of business now, with about 18-20 per cent coming out of Asia.".
Taylor added that Africa was a natural fit for the business, because the region’s import/export profile was similar to Russia.
In March, the group acquired a 50.1 per cent stake in Africa Oil Week, South Africa, for £16m (US$24.7m). The acquisition was one of three for the period, which increased net debt to £56.1m, up from £1.8m.
In December, ITE also purchased Eurasia Rail in Turkey for £7.3m (US$11.3m), as well as Breakbulk’s series of transport and logistics events for £27m (US$41.8m).
Taylor said the business had also embarked on a cost-saving programme. Overall, cost of sales was down 21.6 per cent to £33.3m (US$51.6m) from £42.5m (US$65.8m).
”Our headcount in Russia has fallen by about 25 per cent,” Taylor said. Despite its drop in profits, the board chose to “take a long-term view” and maintain its interim dividend of 2.5p per share (US$0.04), Taylor said.
“Based on what we’ve seen, this was the right thing to do. If things had continued to deteriorate, who knows?” he said.
Taylor said the group had booked about 90 per cent of its revenues for year.
“Our results are beginning to look upwards rather than downwards,” Taylor said. “We’re turning a new page.”
“The group enters the second half with good visibility on current year bookings and the board has confidence in the full year outcome,” Taylor concluded.