RNS Number:3206J
Expomedia Group PLC
28 March 2003
Expomedia Group Plc
Results for the year ended 31 December 2002
Expomedia Group Plc ("Expomedia), the international exhibition and events
company announces its preliminary results for the year ended 31 December 2002
Highlights
First full year of operations in Warsaw and acquisition of remaining 33.3%
interest in Warsaw International Expocentre
Restructuring and implementation of low-cost business model at
International Katowice Fair
30 year lease agreement signed for Moscow International Expocentre
20 year lease agreement signed for Amsterdam International Expocentre
Acquisition of 51% interest in Mash Media Group Ltd (UK)
Acquisition of 51% interest in International Exhibitions and Conferences
Sarl (IEC) (Morocco)
Strategic agreements signed covering an initial 32 event launches
New exhibition company launched in Amsterdam with joint venture agreement
with N.V.Holdingmaatschappij De Telegraaf
New exhibition company launched in Moscow with agreements for exhibitions
and conferences with Informa Group plc, Montgomery International, Penton
Media Europe Ltd, IIR Exhibitions, Independent Media and Heighway Events
Launch of new organising company in Budapest including agreements with Axel
Springer Budapest Publishing Ltd and Zold Ujsag Rt, Hungary
Roger Shashoua, Chairman of Expomedia commented:
"Our first full year of operations was a year of considerable progress for the
Group. Our objective of becoming a major force in the international exhibitions
industry is rapidly being achieved. This is through a combination of well
positioned entries into several new territories for our cost effective
exhibition venues and acceptance by the exhibition industry through the
successful completion of strategic agreements covering an initial 32 event
launches."
For further information:
Sonya Gillespie 020 7376 3300
Mark Shashoua 020 7376 3300
Darra Comyn 020 7376 3300
Results
Turnover for the year was Euro 7.0 million (2001: Euro 6.6 million), an increase
of 7% and gross profit for the year was Euro 3.5million up (2001: Euro 2.8
million). The increase in gross profit is mainly due to the increased
contribution from our Warsaw centre, which operates at a 60% gross margin. The
loss before interest, taxation, depreciation and amortisation was Euro 1.1
million (2001: Euro 1.1 million) and the loss after tax was Euro 2.6 million
(2001: Euro 2.2 million).
Deducting expansion costs of Euro 957,000 relating to future developments in The
Netherlands, Germany, Russia, Serbia-Montenegro and Hungary, the loss before
interest, taxation, depreciation and amortisation was only Euro100,000. In 2003
we will continue to fund expansion in all of these territories and The
Netherlands, Serbia-Montenegro, Russia and Hungary are expected to contribute to
Group revenues towards the end of the year.
Progress and strategy
We have made significant progress in developing our exhibition centres
businesses, signing cost effective leases for two purpose built multi-functional
centres, one in Moscow and one in Amsterdam, thus doubling the number of venues
to be managed by the Company in 2004. In addition we hope to finalise lease
arrangements in other locations including Belgrade, Frankfurt and Koln in 2003
for completion in 2005. Other locations where we are also actively negotiating
include Spain, Hungary, Czech Republic, Italy, India and China.
Key to the expansion of our centres is our organising arm CEE Exhibitions, which
is continuing to offer its local services to international organisers and media
groups. By giving organisers the ability to clone their events in each territory
using the local offices of CEE Exhibitions, we are able to facilitate their
entry into new markets and as part of this strategy, the Group has entered into
strategic agreements during the year covering the launch of an initial 32
events. In addition to these agreements CEE Exhibitions will continue to develop
other events independently of partner agreements in niche sectors for each
market. We therefore expect that during 2003 we will organise over 70 events,
increasing in 2004 to over 100 events.
During the year we acquired a 51% interest in Mash Media Group Ltd, a UK
publisher of exhibition industry related titles. We are currently in the process
of replicating some of these titles into other markets together with the launch
of new titles in the UK. During the year we also acquired a 51% interest in IEC
International Exhibitions and Conferences SARL (IEC), an exhibition organiser in
Morocco, whose plans for 2003 include a range of new titles in Morocco and
expansion into other countries in Africa using Morocco's low cost base.
Management
The Group has continued to attract experienced professionals with extensive
knowledge of the exhibition industry and the markets in which we operate. Their
entrepreneurial spirit and commitment to long term success further strengthens
the management base and reaffirms my conviction that we have assembled the best
team to ensure that the Group achieves its goals.
Prospects
The Board believes that your Group has a promising future, as our vision is
revolutionising the exhibitions industry with the right cost-effective
facilities and events in the right markets. We expect our rate of development to
continue in the next year and look forward to announcing important developments
in the coming months.
With the continued support of our shareholder base, the board believes that
Expomedia Group is rapidly becoming a major force in the international
exhibitions and events market.
Central and Eastern Europe and Russia
We are expanding rapidly across the key growth markets of Central and Eastern
Europe and Russia which are currently under-served in terms of venues and
specialist branded exhibitions. European Union accession will benefit the region
enormously and the Group is ideally placed to benefit from this.
Operating results
2002 was the first full year of operations for our businesses in Warsaw and
while conditions in the Polish market are difficult we are extremely satisfied
with the progress of our Warsaw based activities. During the year we announced
the acquisition of businesses in Warsaw and the launch of new operations in
Russia and Hungary. These new operations complement our existing Polish
activities and with further developments to come, including Serbia-Montenegro,
the Group can look forward with confidence to a major role in the exhibition
industry in the region.
Poland
During 2002 our flagship exhibition centre in Warsaw hosted 36 exhibitions, 15
conferences and 38 other special events and banquets. Considering the poor
economic climate in Poland this was an outstanding result and one on which we
expect to build in 2003.
Our exhibition organising Company in Warsaw, CEE Miedzynarodowe Targi
Warszawskie Sp. Z o.o. (CEE MTW), also had its first full year of operations and
successfully organised 13 events including the Warsaw Motor Show which grew by
76% compared to the 2001 event. CEE MTW also took over the organisation of
Meeting Premiera, the largest stationery show in Eastern Europe, which grew by
25%, compared to the 2001 event. In 2003 we expect to organise 26 events, an
increase of 100% over 2002. These events include a water sports and boat show
which we have taken over from the Polish Water Sports Association. In 2003 we
expect that CEE MTW will become one of the largest exhibition organisers in
Warsaw, a considerable achievement after only two years of operation.
International Katowice Fair organised 28 events in its own dedicated venue in
2002. This excluded two major biennial events, The Katowice Fair, a mining
exhibition, and Interwelding, both of which will be held in 2003. The company's
operation was restructured during the year with significant staff reductions and
management changes, the object of which is to increase its operating margins and
to apply the low cost model that we have implemented in Warsaw. The operations
in Katowice were acquired in 2001 from the management at the time. We believe
that Katowice International Fair is now able to withstand the difficult
environment facing Polish businesses and will be well prepared for the expected
benefits from Poland's entry into the European Union in 2004.
Russia
In April we announced that we had reached agreement to lease a 20,000m(2)
multi-functional exhibition venue in the centre of Moscow. The centre will be
purpose built to the specifications of Expomedia. The final planning process is
currently progressing and we expect that construction will commence in summer
2003 and expect it to be completed within nine months of commencement.
We have also established our local exhibition organising company, OOO
Tsentralnye Yevropeyskiy Vistavskiy (CEV), in Moscow. CEV provides sales support
to exhibition and conference organisers and media groups looking to enter into
the Russian market through a series of long-term joint ventures, management
contracts and licenses. CEV will also look to launch individual niche shows.
We are extremely pleased with the range and number of titles that we have
secured in such a short space of time. Agreements have been signed with leading
organisers including Informa Group Plc, Montgomery International Ltd, Penton
Media Europe Ltd, Nurnberg Messe GmbH and IIR Exhibitions Ltd, which has
resulted in four launches for 2003 with a further 20 anticipated for 2004. We
have also signed a conference joint venture agreement with Informa Group Plc,
one of the largest conference organisers in the world with over 3,000 titles
worldwide. Through this we expect to replicate a number of their conferences in
the Russian market, based on a successful model that they have operated across
Western Europe.
This rapid roll-out of new events, partnerships and agreements underlines the
strength of our business model. With access to internationally recognised
consumer and business-to-business brands we are confident of the success of our
Moscow exhibition business which we anticipate will further enhance the
utilisation of our exhibition centre in Moscow.
Hungary
At the end of 2002 we established an exhibition and conference organising
operation in Budapest, Budapest Nemzetkozi Rendezveny es Kiallitasszervezo Kft
(BNR). We are pleased to have already signed two agreements, one with Axel
Springer Budapest Publishing Ltd for the Budapest Home Show and one a Hungarian
publisher Zold Ujsag Rt to launch a series of conferences. We plan to organise
two exhibitions in 2003 expanding to six in 2004. A rental and marketing
agreement was also signed with the newly refurbished Budapest Arena, which
reopened in March 2003.
Serbia-Montenegro
In the near future we expect to announce an agreement for a purpose built 5,000m
(2) venue in the centre of Belgrade. In addition we will be launching a series
of exhibitions in Belgrade, the first of which will take place in the second
half of 2003, with a further five planned for 2004.
We are also looking at additional opportunities in Hungary as well as Croatia,
Czech Republic and other locations across Russia.
Western Europe
In Western Europe we are planning smaller centres ranging from 4,000m(2) to
6,000m(2) in central city locations. These centres are ideal for smaller
exhibitions, conferences and events.
The Netherlands
In April we announced that we had agreed to lease a 6,000m(2) multi-functional
conference and exhibition centre in Amsterdam. The centre will be purpose built
to our specification and is expected to be completed at the end of 2004.
During the year we also announced a joint venture with N.V. Holdingmaatschappij
De Telegraaf, a major media group in The Netherlands to launch a series of
consumer exhibitions backed up by their extensive range of newspapers and
magazines and supported by their associated television companies. The joint
venture has so far launched three exhibitions for the second half of 2003
covering Fashion and Beauty, Food and Drink and Country Living. A further six
new events are planned for 2004.
In addition we licensed an existing event, Call Center Expo Europe, from CMP
Europe Ltd, which will be held for the second time in October this year. We are
currently finalising arrangements for other events and joint ventures in the
Dutch market.
Germany
In Germany we are pursuing opportunities for new venues in Frankfurt, Koln and
Dusseldorf, and pending successful completion of those centres we will also look
at other major German cities. We have existing associations with exhibition
organisers, which will form the basis of our German organising business.
We are also looking at additional opportunities in Spain and Italy.
Rest of the World
Morocco
In June 2002 we acquired a 51% interest in exhibition organiser International
Exhibitions and Conferences SARL (IEC), based in Casablanca, Morocco. In 2002
IEC organised four events in Casablanca. We are currently expanding these themes
into other African territories and have recently announced the launch of oil and
gas and mining exhibitions and conferences in Senegal.
We are also looking at additional opportunities in India and China.
Publishing
In June we announced that we had acquired a 51% interest in Mash Media Group
Ltd, which owns a portfolio of publications produced in the UK, aimed at the
exhibition industry. In addition we subsequently launched a further title '
Exhibiting', targeted at marketing professionals who participate in exhibitions,
which had a positive contribution in its first month of launching. In the first
quarter of 2003 Mash Media have launched two additional publications aimed at
the conference organising industry 'Conference News' and 'Conference Handbook'
and have enhanced an existing product, LUKE, to become a monthly publication.
Our goal is to clone these titles in many of the markets where we have
operations, thereby increasing our offering to each market. We are launching the
first of these titles in Russia in June 2003.
Summary
The management believes that our first full year of operations as a public
company has been successful in achieving our goal of creating the necessary
foundations to enable the Group to source and establish a continuous stream of
branded exhibitions and conference titles. We have also successfully created the
necessary sales organisations in nine cities to launch these titles, which will
be held in our expanding chain of venues.
We are confident that our expansion will continue at its current rate for the
next two to three years despite the present unsettled market conditions and that
your Group is in an ideal position to realise its full potential.
Financial review
In 2002 the Group significantly strengthened its balance sheet with a
substantial increase in net assets and a significant reduction in gearing.
Expansion has been funded by the Group's own resources and through the issue of
new Ordinary Shares to existing and new shareholders. During 2003 we expect to
continue our expansion and where necessary this will continue to be funded from
existing resources, partnerships and other external sources.
Funding
During 2002 the Group raised a total of Euro7.0 million after expenses through
the issue of new Ordinary Shares. These funds were utilised in the expansion of
the activities of the Group and in a number of acquisitions, most notably the
acquisition of the remaining shares in Warsaw International Expocentre Sp. Z
o.o. in February 2002. In addition, in February 2003 we announced that we
intended to place 1.7 million shares with Informa Group Plc to raise Euro 3.0
million after expenses.
Treasury policy
The Group is exposed to movements in foreign currencies for bank debt, the
translation of net assets and trading transactions. Many of the Group's
transactions are denominated in non-Euro currencies. It is not the Group's
policy to use derivative instruments to hedge foreign currency transactions. To
manage currency fluctuations wherever possible the Group uses Euros or US
Dollars to denominate sales contracts. This reduces the risk associated with
operating in countries where the local currency is subject to volatile
movements.
Taxation
The tax charge arises from the profits of International Katowice Fair in Poland
where the corporation tax rate is 28%. The Group has losses available which are
expected to be utilised against future trading profits.
Current liquidity
At 31 December 2002 the Group's net debt was Euro3.7 million compared with a net
debt of Euro14.4 million at the end of 2001 with gearing at 15% (2001: 110%).
This substantial reduction is due to the exercise of rights under a Share
Exchange Agreement by ABN Amro Danube Ventures BV under which they converted an
equity interest in shares in our subsidiary Expocentres Eastern Europe Ltd into
Ordinary Shares in the Company. Due to conditions attaching to this equity
interest, it was treated as a Euro10.4 million loan in the 2001 financial
statements. ABN Amro Danube Ventures BV currently owns 6.5 million shares in the
Company.
During the year we also made scheduled repayment of borrowings in Warsaw and
Katowice relating to the construction of the exhibition centres in those cities.
The only bank borrowing outstanding at 31 December 2002 relates to the Warsaw
International Expocentre, where the loan balance at that date was US$4.5
million. This loan is being repaid over the next five years.
Balance sheet
The Group's net assets at the end of 2002 were Euro24.0 million (2001: Euro13.0
million). The assets of the Group are largely made up of freehold and long
leasehold land and buildings with a carrying value of Euro24.0 million. Net
goodwill has increased to Euro3.4 million (2001: Euro1.7 million) following the
acquisition of interests in Mash Media Group, IEC and the remaining 33.3%
interest in Warsaw International Expocentre Sp. Z o.o.
Because the Group has substantial assets in Poland changes in the value of the
Polish Zloty against the Euro cause changes in the value of these assets when
translated into Euros. During the year the revaluation of the Euro caused a net
recognised decrease in the value of these assets of Euro2.3 million, as set out
in the statement of total recognised gains and losses.
Consolidated profit and loss account
Year ended
Year ended 31 December
31 December 2001
2002 Restated
Euro'000 Euro'000
Turnover
Continuing operations 6,181 6,578
Acquisitions 851 -
7,032 6,578
Cost of sales (3,521) (3,751)
Gross profit 3,511 2,827
Administrative expenses
Expansion costs (957) (124)
Other administrative expenses (4,797) (4,595)
Administrative expenses (5,754) (4,719)
Operating profit/(loss)
Continuing operations (2,257) (1,892)
Acquisitions 14 -
Operating loss (2,243) (1,892)
Interest receivable and similar income 44 299
Interest payable and similar charges (374) (294)
Loss on ordinary activities before taxation (2,573) (1,887)
Tax on loss on ordinary activities (47) (317)
Loss on ordinary activities after taxation (2,620) (2,204)
Minority interests 214 (508)
Retained loss for the period transferred to reserves (2,406) (2,712)
Basic loss per share (Euro) (0.07) (0.55)
Consolidated balance sheet
31 December
31 December 2001
2002 Restated
Euro'000 Euro'000 Euro'000 Euro'000
Fixed assets
Intangible assets
Goodwill 4,235 2,544
Negative goodwill (813) (843)
3,422 1,701
Exhibition and publication titles 746 -
4,168 1,701
Tangible assets 26,301 29,345
30,469 31,046
Current assets
Stocks 12 29
Debtors 2,125 1,140
Cash at bank and in hand 506 3,143
2,643 4,312
Creditors: amounts falling due (4,437) (5,973)
within one year
Net current liabilities (1,794) (1,661)
Total assets less current liabilities 28,675 29,385
Creditors: amounts falling due after (3,497) (16,175)
more than one year
Provision for liabilities and charges (1,187) (165)
Net assets 23,991 13,045
Capital and reserves
Called up share capital 3,017 1,777
Share premium account 18,774 2,631
Other reserves 5,998 5,998
Profit and loss account (7,128) (2,448)
Equity shareholders' funds 20,661 7,958
Minority interests - equity 3,330 5,087
23,991 13,045
Consolidated cash flow statement
Year ended
Year ended 31 December
31 December 2001
2002 Restated
Euro'000 Euro'000
Net cash outflow from operating activities (1,378) (2,555)
Returns on investments and servicing of finance
Interest received 36 67
Interest paid (348) (426)
Realised foreign exchange (loss)/gain (18) 232
Net cash outflow from investments and servicing of finance (330) (127)
Taxation
Tax paid (115) (327)
Capital expenditure
Payments to acquire exhibition and publication titles (173) -
Payments to acquire tangible fixed assets (1,750) (3,597)
Receipts from sale of fixed assets 100 -
Net cash outflow from investing activities (1,823) (3,597)
Acquisitions and disposals
Purchase of subsidiary undertakings (2,837) (5,421)
Net cash acquired with subsidiaries 18 40
Net cash outflow from acquisitions and disposals (2,819) (5,381)
Cash outflow before financing (6,465) (11,987)
Financing
New shares issued 7,236 4,485
Expenses paid in connection with share issues (1,355) (445)
Decrease in loans from related undertakings (570) (1,707)
New long term loan - 10,393
Repayment of short term borrowings (52) (558)
Reduction in long term loan (1,072) (1,684)
Net cash inflow from financing 4,187 10,484
Decrease in cash (2,278) (1,503)
Change in accounting policy
The accounts for the year ended 31 December 2001 included a provision for
deferred tax of Euro1,265,000 relating to the revaluation of certain land and
buildings on the acquisition of Warsaw International Expocentre Sp. zo.o (WIEC).
The group has since adopted FRS 19 ' Accounting for taxation' which does not
allow a provision for deferred tax on revalued assets where there is no binding
commitment of sale. As a result the provision is no longer recognised and the
comparatives are restated. The effect of the adjustment on the comparative
figures is the creation of negative goodwill on the acquisition of WIEC of
Euro843,000 and subsequent increase in minority interest to Euro5,087,000. The
adjustment had no effect on the comparative profit and loss account or statement
of total recognised gains and losses.
During the year the group revised the basis of allocation of certain expenditure
between Cost of sales and Administrative expenses in a subsidiary undertaking.
The comparatives have been restated on a consistent basis resulting in a
reclassification of Euro905,000 from Cost of sales to Administrative expenses.
The comparatives in the cashflow statement have been restated as a result of a
repositioning of expenditure of Euro1.1 million, associated with previous
fundraising, from working capital movements to financing.
Reconciliation of operating loss to cash outflow from operating activities
Year ended Year ended
31 December 2002 31 December 2001
Euro'000 Euro'000
Operating loss (2,243) (1,892)
Depreciation of tangible assets 847 715
Amortisation of goodwill 204 101
Loss on disposal of tangible assets 27 -
Decrease/(increase) in stocks 15 (3)
(Increase)/decrease in debtors (862) 152
(Decrease)/increase in creditors 634 (1,628)
Net cash outflow from operating activities (1,378) (2,555)
Loss per share
Loss per share has been calculated on the basis of the loss for the year of
Euro2,406,000 (2001: Euro2,712,000) and on the weighted average number of
ordinary shares in issue. The weighted average number of shares used are:
Year ended Year ended
31 December 2002 31 December 2001
No No
Basic 35,213,096 4,970,104
Share options 2,950,355 -
Conversion under ABN Amro option agreement - 197,423
Diluted 38,163,451 5,167,527
In accordance with FRS 14 the diluted loss per share for the year ended 31
December 2002 is equivalent to the basic loss per share as any conversion of
options would reduce the net loss per share.
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 December 2002. The financial
information for 2002 is derived from the audited statutory accounts for 2002
which were approved by the Board of Directors on 28 March 2003 and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. Copies of the statutory accounts will be posted to shareholders on 16
April 2003. Additional copies will be available from the registered office of
Expomedia Group Plc, Verney House, 1B Hollywood Road, London SW10 9HS.
The financial information has been prepared in accordance with accounting
standards generally accepted in the United Kingdom, on a going concern basis
under the historical cost accounting method as modified by revaluation of
certain categories of tangible fixed assets.
This information is provided by RNS
The company news service from the London Stock Exchange
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