ITE Group PLC Managing Downturn in Emerging Markets Managing - - PowerPoint PPT Presentation

ITE Group PLC

Managing Downturn in Emerging Markets Managing Downturn in Emerging Markets

Russell Taylor Neil Jones

About ITE Group plc – Apr 2010

1

Chief Executive Officer ITE Group PLC Group Finance Director ITE Group PLC

ITE Group ITE Group PLC PLC

• Founded in 1992, floated in 1997
• ITE is a leading organiser of B2B trade exhibitions in emerging and developing markets
• Dominant in Russia – with a leading position in many Central Asian states, Turkey and India
• ITE has 23 international offices and runs 180 events per year in 10 emerging markets

About ITE Group plc – Apr 2010

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ITE World ITE World

About ITE Group plc – Apr 2010

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ITE’S Key ITE’S Key strengths strengths

• Geographic focus

Geographic focus – fast growing markets

• Sector

Sector – big international businesses

• Brands

Brands – international and local recognition

• Venue

Venue Relat elationshi nships ps– availability of high quality space in the right locations

• In

Infrastru astructu ture re – network of local offices

About ITE Group plc – Apr 2010

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Rev Revenue nue by by Regi Region FY

• n FY 2009

2009

ITE Group Revenue by Region

Eastern & Southern Europe 8% UK & Western Europe 6% Central Asia & Caucasus 16% R i

About ITE Group plc – Apr 2010

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Russia 70%

Rev Revenue nue by by Sector Sector FY 2009 FY 2009

ITE G R b S t

Other 13%

ITE Group Revenue by Sector

Construction 40% Fashion & Textiles 7% Motor & Transport 5% Food & Drink Oil & Gas 14% Travel 12% 9%

About ITE Group plc – Apr 2010

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ITE ‘Pre – Crisis’ e C s s

About ITE Group plc – Apr 2010

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Character Characteristics of stics of the Mark the Market Place et Place (at September (at September 2008) 2008)

• End of sustained period of economic growth in our markets 5% - 10%
• Construction sector – ‘frothy growth’
• Under funded and immature banking system
• Local businesses built in era of growth - no credit facilities/ no experience
• f downturn
• International customers – bigger, more experienced and better funded

About ITE Group plc – Apr 2010

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Charac aracteristics of teristics of IT ITE’S E’S bu busin siness ss model-pre model-pre crisis ( isis (1)

• Booking

Bookings made in made in advanc advance by by custome customers (1-9 months s (1-9 months befor before eve event)

• Booking

Bookings made in made in advanc advance by by custome customers (1-9 months s (1-9 months befor before eve event)

• Payments collected in

Payments collected in advanc advance of

• f exhibi

exhibition

• n
• Trade visi

Trade visitors invit rs invited/non paying d/non paying

• Payments collected in

Payments collected in advanc advance of

• f exhibi

exhibition

• n
• Trade visi

Trade visitors invit rs invited/non paying d/non paying

• Customers 50% ‘emerging’ / 50% developed
• 95% of revenues priced in hard currency
• Customers 50% ‘emerging’ / 50% developed
• 95% of revenues priced in hard currency

About ITE Group plc – Apr 2010

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Charac aracteristics of teristics of IT ITE’S E’S bu busin siness ss model-pre model-pre crisis ( isis (2)

• Cost structure of an event:
• Cost structure of an event:
• 50% venue commitment
• 1 year before
• 20%

20% staff staff

• semi variable

emi variable 20% marketing essential to quality

• 50% venue commitment
• 1 year before
• 20%

20% staff staff

• semi variable

emi variable 20% marketing essential to quality

• 20% marketing
• essential to quality
• 10% on-site

10% on-site cost cost

• variable

ariable

• Central & office overhead (15% of revenues)
• 20% marketing
• essential to quality
• 10% on-site

10% on-site cost cost

• variable

ariable

• Central & office overhead (15% of revenues)

Central & office overhead (15% of revenues) Central & office overhead (15% of revenues)

About ITE Group plc – Apr 2010

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Economic Crisis Economic Crisis Economic Crisis Economic Crisis

About ITE Group plc – Apr 2010

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What happened What happened?

• Economic “brakes” hit hard in December 2008
• Little Government Intervention
• Bank finance not available
• Currency devaluation – circa 30% across all markets

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About ITE Group plc – Apr 2010

Resul Result

• Over Dec 08/ Sep 09:
• ‘Local Sales’ traumatised for future events
• Cancellations/reductions on existing bookings

I t ti l l ili t

• International sales more resilient

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About ITE Group plc – Apr 2010

ITE’S Weekly ITE’S Weekly Sales Sales

30,000 M2

Year On Year M2 Comparison

Pre close Statement L4L Sales Volumes +10% YOY Prelims 15,000 20,000 25,000 Prelims L4L Sales Volumes

• 3% YOY

FY 08

5,000 10,000

FY 09

(5,000) 29‐Aug 26‐Sep 24‐Oct 21‐Nov 19‐Dec 30‐Jan 27‐Feb 27‐Mar 24‐Apr 22‐May

About ITE Group plc – Apr 2010

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ITE’S Weekly ITE’S Weekly Sales Sales

400,000 450,000 M2

Year On Year Cumulative M2 Comparison

L4L Sales Volumes 250,000 300,000 350,000

FY

turn negative

FY 08

50 000 100,000 150,000 200,000

FY 09

‐ 50,000 29‐Aug 26‐Sep 24‐Oct 21‐Nov 19‐Dec 30‐Jan 27‐Feb 27‐Mar 24‐Apr 22‐May

About ITE Group plc – Apr 2010

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Resul Result

• Over Dec 08/ Sep 09:
• ‘Local Sales’ traumatised for future events
• Cancellations/reductions on existing bookings

I t ti l l ili t

• International sales more resilient
• ITE’s largest sector (40%) - construction was hardest hit

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About ITE Group plc – Apr 2010

How did How did ITE manage ITE manage

• Management experience of late 1990’s – needed to take decisive action
• Reduced exposure to soft currencies - Dec 08
• Reduced exposure to soft currencies - Dec 08
• Cut venue commitments- Jan 09
• All ‘exhibition costs’ (except marketing) cut pro-rata to m2 sales decline
• Acted quickly on fixed costs – reduced staffing by 10%+
• Worked with customers to ensure continued participation
• Pricing/exchange rate flexibility offered to local customers
• Little discounting

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About ITE Group plc – Apr 2010

After the Crisis After the Crisis

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About ITE Group plc – Apr 2010

Final Analysis Final Analysis

• 2009 ‘Like-for-like’ volume sales down by 20% +
• Working capital drain on ITE’s business circa £10m
• Working capital drain on ITE s business circa £10m
• We retain #1 exhibitions & events in markets
• Retained customers
• Overhead & costs ‘rightsized’ for recovery
• Balance sheet remained strong after absorbing financial impact

About ITE Group plc – Apr 2010

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12 Months 12 Months La Late ter

Markets Markets

• National markets (Moscow) recovering well
• Regional markets – stable but not yet in recovery

Regional markets stable but not yet in recovery Sectors Sectors

• ‘Consumer sectors’ Food/Travel stronger
• Construction – recovery in Moscow / stable elsewhere

y /

• Oil & Gas – recovery in line with oil price

Customers Customers

• Locals strong in Moscow / stable elsewhere
• Internationals weak throughout
• poor sales last year
• ‘domestic economies’ under pressure

About ITE Group plc – Apr 2010

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Positione Positioned for for recov recovery ry – – Russian Economy ussian Economy

• Russia is the worlds 11th largest economy
• 140m people – abundance of natural resources
• Little public debt – @5% of GDP (UK +80%)
• Little consumer debt
• Dependant on oil prices
• Significant investment required in new industries and infrastructure

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About ITE Group plc – Apr 2010

Positione Positioned for for recov recovery ry

• Smaller competition has been reduced/eliminated
• Good assets available at lower prices
• Opportunities for ITE to expand sector spread

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About ITE Group plc – Apr 2010

Conclus Conclusions

• ns
• Experience helps – read the signs
• Financial structure to absorb downturn
• Take decisive action early – especially on cost base
• Work with customers
• Protect your best assets

k d f k

• Take advantage of new market opportunities

About ITE Group plc – Apr 2010

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Q + A + A Q

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