I I T E G R T E G R O U P O U P The Company The Company The - - PowerPoint PPT Presentation

I I T E G R T E G R O U P O U P The Company The Company The Strategy The Opportunity...

Introduction Introduction

1.

International Trade

2.

Exhibition Fundamentals

3.

Russian Macro Environment

4.

Russia – effects of crisis

5.

Company Strengths

6.

Strategic Opportunity

7.

Summary

Adam Smith wrote Adam Smith wrote “Man has an intrinsic propensity to “Man has an intrinsic propensity to truck, barter and exchange one thing for another” thing for another

ITE – ITE – MosBuild

• sBuild 09 + MITT 09 Testimonials

09 + MITT 09 Testimonials

The rumour on the street is, Russia’s the market with the biggest growth potential right now and it has been for the last couple of years and

2009 2009

We are really optimistic for the future and we think this is the best time to enter the market. as bee o e as coup e o yea s a d we’re using MosBuild as a vehicle to explore those opportunities. We have participated for 11 years and we’re

MosBuild 2 MITT 2

Russia is becoming very important for us because Russian tourists spend quite a lot in Mauritius... If you’re not visible, you might lose We have participated for 11 years and we re investing as much as we have always done. In a situation like this, it’s even more important to attend exhibitions like this so you can be seen.

M

your market share. Russia is the second biggest market for Cyprus after the British. In the first two months of this MosBuild is our main advertisement in Russia. It’s not easy to do publicity because the market is so big but people from all regions of Russia come here. year, despite the crisis, we had an increase of about 18%. At the last minute, we had to buy more space at MITT because we have many partners in I am astonished! I didn’t expect that MosBuild was so big. It is a strong exhibition, with people from all over the world. at MITT because we have many partners in Germany that are interested in the Russian market.

Russia’s Imports Russia’s Imports

5%

% f i

Total imports $290bn in 2008

* Source WTO % of total imports

ITE – ITE – International Sales nternational Sales to Russia to Russia

5%

Russian Domestic 50%

* Source WTO Sou ce O

ITE – ITE – Sales Office Expansion ales Office Expansion

USA – New Jersey (2009) China Beijing (2007) Poland – Poznan (2008) USA New Jersey (2009) Spain – Valencia (2008) UAE – Dubai (2008) China – Beijing (2007) Malaysia – Kuala Lumpur (2008)

Exhibition Fundamentals Exhibition Fundamentals

• Main B2B channel to market in Russia & CIS
• Globalisation = Growth in International exhibitions
• International scalability
• Resilience & Longevity of #1 events – through economic cycle

g y g y

• Cash flow positive

Exhibition Media in Emerging Markets Exhibition Media in Emerging Markets

US Exhibitions, Publishing and Data Markets, 2006 $m UK Exhibitions, Publishing and Data Markets, 2006 $m Russia Exhibitions, Publishing and Data Markets, 2006 $m

c.570 5,050 5,737 15,950

$ $ $

4,014 10,936 10,302 Russian publishing and data

• pportunities

remain small currently 80 c.195 Exhibitions c.80 Publishing Data Publishing Exhibitions Data Exhibitions Data Publishing

Source: PwC, VSS, Exhibition Venues Association, Key Note, OC&C analysis

Increasingly Developed B2B Market

International sales in our top events International sales in our top events

Local International

37% 37% 39% 39% 46% 46% 47% 47% 56% 56% 63% 63% 61% 61% 54% 54% 53% 53% 44% 44%

MITT 2008 MITT 2008 KIOGE KIOGE EXH EXH & & CONF CONF MOSBUI MOSBUILD WORLD FOOD WORLD FOOD KAZBU KAZBUILD & & INTERIORS INTERIORS MOSCOW MOSCOW 2008 2008

ITE – ITE – Sector Strength ector Strength

Sect Sector Stren

• r Strength

th

6 7 8 9 10

g

6 8 nts 6 8

2 3 4 5 6 No1 2nd/3rd

3 4 2 3 4 # of eve 3 4 4 4 3 2

1 d/3 d

2 1 2 1 1 2 1 2 2 2 1 1 1

Cash flow profile Cash flow profile

1000 1200

Cumulative Cashflow Cumulative Cashflow

Exhibition 5000m² - £ 1.2m revenue

First stage collections Second stage collections & venue payments 200 400 600 800 £’000s Visitor promotion On-site stand construction Deposits collected

• 1
• 12
• 11
• 10
• 9
• 8
• 7
• 6
• 5
• 4
• 3
• 2
• 1

200 Months to opening of exhibition

Russian Macro Environment Russian Macro Environment

• 8th largest economy in the world*
• Natural resource dependent economy
• Oil & gas sector accounts for 60%+ of exports #
• Resource sectors - 90% of exports #
• Oil prices underpin economy & development

p p y p

*CIA World Fact book – 2008 GDP Data # Economist intelligence unit

RUSSIA – RUSSIA – 2009 2009 in perspective in perspective

• Q4 2008 – Dead Stop

Q4 2008 Dead Stop

• Industrial out put drops 10% between Nov – Feb
• Massive de-stocking
• Ruble 30% devaluation (90% in 1998)
• Ruble 30% devaluation – (90% in 1998)
• Government spends $200bn – devaluation support
• Cumulative Public Debt 2009 – 8.4% of GDP (UK 59%)

Russian GDP Growth 1997 Russian GDP Growth 1997 – 2010 2010 (f) (f)

% y–o-y

10 8 6 4 2

• 2
• 4

97 98 99 00 01 02 03 04 05 06 07 08 09 10

• 6

i i i i * Source: Business monitor international

Russian Economy Russian Economy – The Future he Future

$400bn so ereign f nd 3rd Largest in World *

$400bn sovereign fund – 3rd Largest in World * Ruble devaluation will boost competitiveness Recovery possible by end of 2009 Growth in 2010 projected + 1% to 2%*

p j

Oil price +/- $10 a barrel = +/- 1% GDP *

Consumer strong no household debt

Consumer strong – no household debt

*Economist Intelligence Unit

Russia Russia

Ale xande r Shtale nkov ITE Moscow General Director since June 2005 ITE Moscow General Director since June 2005 Background: considerable and extensive expertise in managing teams and developing business strategy for leading corporate teams and developing business strategy for leading corporate

• rganisations in Russia, CIS & Central Asia, IBM, Dell, Xerox

2009 statistic s:

Mosc ow Novosibir sk St Pe te r sbur g T

• tal

Staff 155 176 83

414

2009 statistic s: Events 28 55 19

102

Revenue ₤m (2008) 57 5* 7

69

The revenue from Russia is 60% of total ITE Group’s revenue.

* Annualised

Russian Exhibition Market Trends Russian Exhibition Market Trends

• Projects of new exhibition centre development are postponed
• Entrance to the market for new big international companies is

postponed

• The overall quantity of exhibitions in Russia (2500) will decrease by
• The overall quantity of exhibitions in Russia (2500) will decrease by

circa 50% during crisis*

• Definite shrinkage of the quantity of exhibition organisers (300) by 50%

during crisis

• 40% of Russian enterprises databases (exhibitors & visitors) will become
• ut-of-date because of company bankruptcies

* EXPA Foundation market research agency

Russian Exhibition Market (m²) Russian Exhibition Market (m²)

In 2008, after the acquisition of Siberian Fair, ITE became №1 in Russia with in Russia with estimated market share about 12%

Source: EXPA Foundation market research agency g y

Russian Regions Russian Regions

Besides Moscow and St. Petersburg, there are eleven cities in Russia with annual net exhibition space of more then 20K square meters

75 996 Krasnodar

with annual net exhibition space of more then 20K square meters. Krasnodar & Novosibirsk are the biggest.

38 519 55 345 31 023 74 782 13 171 36 972 Rostov-na-Donu Nizhnij Novgorod Ekatherinburg Novosibirsk

Acquired 2008

34 637 39 980 34 124 37 006 38 519 10 000 12 000 13 171 Perm Omsk Kazan Samara Rostov na Donu 26 078 31 371 34 637 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 Krasnoyarsk Irkutsk Perm RUEF members

• thers

RUEF members

• thers

Opportunities for ITE Opportunities for ITE

Crisis gives ITE unique oppor

tunitie s:

• to increase market share in Moscow and regions
• to acquire new events at reasonable prices
• to acquire new events at reasonable prices
• to launch new events into a less competitive market
• to expand JV’s with international brand owners
• to attract leading professionals to join ITE team with their projects
• to optimise internal business processes (technology for

communicating with exhibitors & visitors)

Development Strategy Development Strategy

E xte r nal

• Regional development

Inte r nal

• New visprom initiatives
• Regional development
• Acquisitions
• New visprom initiatives
• New WEB strategy
• New launches

H dh ti

• Improving sales culture

New management structure

• Headhunting
• New management structure

Achievements 2005 Achievements 2005 - 2009 2009

• ITE became No.1 exhibition company in Russia – 12% market share

ITE became No.1 exhibition company in Russia 12% market share

• Recent acquisitions (Maxima, Interstroy, Sfitex, Siberian Fair)

JV’s started (Messe Frankf rt Reed E hibitions)

• JV’s started (Messe Frankfurt, Reed Exhibitions)
• Term agreements with principal venues (Expocentre, Crocus)
• Strong governmental support received for exhibitions
• Regional expansion - Novosibirsk
• Staff development / management team built

ITE Group Strengths ITE Group Strengths

• #1 Exhibitions in key sectors across all Russia - CIS
• Long established partnerships with venues
• Local teams + international sales capability
• Visibility
• Flexible cost structure
• No Debt

Venue Relationships Venue Relationships

• Long term commitment to use venue/ theme protection & fixed prices
• Low cost finance for venue development/improved facilities
• Low cost finance for venue development/improved facilities
• Relationship in a crisis – organiser & venue share the pain

Flexible Cost Structure of an event Flexible Cost Structure of an event

Budge t Ac tual

• Sales

200 140

• 30%
• Venue

(50) (35)

• 30%

St ff (25) (20) 20% 25%

• Staff

(25) (20)

• 20% - 25%
• Marketing

(12.5) (12.5)

• On-site

consumables (12.5) (9.5)

• 25%
• Gross Profit

100 63

• 36%

Margin 50% 45% g

Sensitivity analysis Sensitivity analysis

Hypothe tic al example of 20% y-o-y decline in volumes Hypothe tic al example of 20% y-o-y decline in volumes

Yr0 Yr1 Yr2 Yr3

£’m

30 38 38 32 29 20 Opening cash Trading profit

Biennial effect

• 3
• 9
• 21
• 20
• 17

30 38 38 4 g p NWC outflow Tax & Dividend

Constant dividend Note: This is illustrative only and does not represent management expectations

30 38 38 41

dividend

GDP Growth in Core Markets GDP Growth in Core Markets

2008 2009* 2010*

• Russia

7%

• 4%

1%

• Kazakhstan

5%

• 2%

2% Kazakhstan 5% 2% 2%

• Azerbaijan

19% 4% 6%

• Uzbekistan

8% 5% 8%

• Ukraine

6%

• 7%

2%

• Turkey

4%

• 3%

2%

• UK
• 4%

* Business monitor international Business monitor international

ITE – ITE – The Strategic he Strategic Opportunity Opportunity

ITE G ITE Group positioned for a market recovery Leverage expertise internationally Expand geographies – Invest in portfolio of leading events Take market share in Capitalise on macro- economic trends Economic development exposure to new emerging market with similar dynamics Continue to invest in target sectors Launch – JV – acquire into new, international sectors will drive growth in end markets in the future Utilise balance sheet strength Continue to invest in international sales capability sectors strength

Summary Summary

ITE’s business is based on real trading ITE s business is based on real trading Exhibitions are the route to market in Russia & CIS ITE has strong market positions ITE has financial strength to prosper in this crisis

ITE has financial strength to prosper in this crisis

ITE now has real opportunities to expand its business

Edward Strachan – Edward Strachan – Executive Director Executive Director

New Jersey

• St. Petersburg

Beijing Istanbul Atyrau Astana Almaty Bishkek Tashkent Dushanbe Baku Dubai j g Dushanbe Baku Kuala Lumpur

APPENDICES APPENDICES

I.

Key Exhibitions

II.

Key Management

III.

Employees

Key Exhibitions Key Exhibitions (in

(in 2008 2008 gross gross profit profit order)

• rder)

Appendix I

Appendix I

R ank E ve nt L

• c ation

2009

m² sold

2008

m² sold

2007

m² sold 1 MosBuild & MosBuild+ Moscow 75,000 87,100 84,400 2 Moscow International Travel & Tourism Moscow 20,200 20,800 18,500 3 W ld F d M M 24 100 24 500 3 World Food Moscow Moscow

• 24,100

24,500 4 Kazakhstan Oil & Gas / conference Kazakhstan 10,300 11,200 9,600 5 MODA UK (Spring & Autumn) U.K. 33,900 34,700 6 Expoelectronica Moscow 5,300 9,200 8,900 7 Transrussia Moscow 9,500 8,200 6,200 8 Kazbuild (Spring & Autumn) Kazakhstan 14,800 18,300 9 Baltic Building Week St Petersburg 9,600 10,400 10 Ukraine International Travel & Tourism Kyiv 5,000 7,100 5,700 226,000 221,200

% of IT E ’s 08 Gr

• ss Pr
• fit e ar

ne d by T

• p 10 e ve nts

67%

Key Management Key Management Appendix Appendix II II

Iain Paterson Chairman 61, Non Executive Chairman since May 2002, former Board member at Enterprise Oil; Chairman of AnTech Ltd and Plebble Loyalty Ltd and Non-Executive Director at MOL NyRt., and Hunting PLC. Russell Taylor CEO 50, ACA, joined ITE in 2003 as Finance Director , appointed CEO in

• 2008. Formerly Finance Director at Earls Court Olympia Group and

Air Miles International Group, 15 years experience in industry. Neil Jones Finance Director 42, ACA, joined ITE in November 2008, formerly Finance Director at Tarsus Group Plc and Advanstar Communications, 10 years experience in industry. Ed d St h CIS R i l 44 O ti l M f ITE i R i th CIS d th C i Edward Strachan CIS Regional Director 44, Operational Manager for ITE in Russia, the CIS and the Caspian region since 1992. ITE Board Director since 2003, 17 years experience in industry. Alexander General Director 43, Joined ITE in 2005, formerly Managing Director for Dell Distribution Shtalenkov Moscow in Russia, formerly IBM Management, 4 years experience in industry. Stephen Keen Sales & Ops Director – Moscow 43, Joined ITE in 2000. Based in Moscow managing sales and

• perations of the Moscow portfolio, 9 years experience in industry.

Infrastructure Infrastructure Appendix Appendix III III

Offic e Countr y St ff 2009 E t Staff E ve nts

Moscow Russia 155 28 St Petersburg Russia 83 19 Novosibirsk Russia 176 55 London UK 96

• North, England

UK 36 6 Almaty, Astana, Atyrau Kazakhstan 104 47 Kiev Ukraine 73 18 Istanbul Turkey 40 5 Hamburg Germany 35

• Tashkent, Bishkek

Uzbekistan/Tajikistan/Kyrgyzstan 26 16 Baku Azerbaijan/Georgia 37 20 Other Africa/China /Turkmenistan 36 2 897 215 897 215