Christie Regulatory News (CTG)

4 April 2012

Christie Group plcPreliminary results for the 12 months ended 31 December 2011

Christie Group plc ('Christie Group' or the 'Group'), the leading provider of Professional Business Services and Stock & Inventory Systems & Services to the leisure, retail and care markets, is pleased to announce its preliminary results for the 12 months ended 31 December 2011.

Key points:

·; Revenue increased by 9.0% to £53.3m (2010: £48.9m)

·; Operating profit before exceptional items of £0.7m (2010: £1.0m)

·; Profit before tax before exceptional items of £0.6m (2010: £0.9m)

·; Tax charge is entirely attributable to a reduction in deferred tax assets with no corporation tax payable in 2012

·; Exceptional loss of £0.4m (2010: £nil) incurred in the opening of a new Dubai office

·; Dividend proposed of 0.5p (2010: 1.0p per share)

·; The current year has started well

·; Strong position in chosen markets delivering a resilient performance

·; Our international capability strengthens our reach and ability to complete cross-border mandates for larger clients

·; Sustained investment in technology and training

·; Christie + Co awarded 'UK's most active agent' in the Leisure and Hotels category by the Estates Gazette for the second year since its inception two years ago

·; Clients in 2011 include: Zara, Hobbycraft, Butlins, Tesco Pharmacy, BHS, Cairn Hotels, Park Resorts, Mecca, Murrayfield Stadium, Southern Cross and von Essen Hotels (in Administration), Punch Taverns, Enterprise Inns, Admiral Taverns and the Scottish & Newcastle Pub Company

Commenting on the results, David Rugg, Chief Executive of Christie Group said:

"Christie Group's strong revenue growth demonstrates a growing business with a sustained ability to deliver premium levels of client service. Given the prevailing economic climate this is a pleasing result and is testament to the underlying strength of our business model.

"Christie Group is in a strong position. We have a manageable cost base and are investing in both systems and people to meet additional demand. We have a strong track record, a proven business model and a lengthening list of prestige clients."

Enquiries:

Notes to Editors:

Christie Group plc (CTG.L.), quoted on AIM, is a leading professional business services group with 38 offices across the UK, Europe, Canada and the Middle East, catering to its specialist markets in the leisure, retail and care sectors.

Christie Group operates its two complementary business divisions: Professional Business Services (PBS) and Stock & Inventory Systems & Services (SISS). These divisions trade under the brand names: PBS - Christie + Co, Christie Finance, Christie Insurance and Pinders: SISS - Orridge, Venners and Vennersys.

Tracing its origins back to 1846, the Group has a long-established reputation for offering essential services to client companies in agency, valuation services, investment, consultancy, project management, multi-functional trading systems and online ticketing services, stock audit and inventory management. The diversity of these services is intended to provide a natural balance to the Group's core agency business.

For more information, please go to www.christiegroup.com

CHAIRMAN'S STATEMENT 

I am pleased to present these results, which despite difficult markets in 2011, demonstrate progress in your business. My trading update of 5th December 2011 referred to a number of transactions that had been delayed by external factors and the subsequent effect on the results for the year. Despite the timing of these specific deals, the reliability of our operations and the depth of our expertise continue to be attractive to those looking for professional support in difficult times, which puts Christie Group in a strong position in its chosen markets.

Financial turmoil in the Eurozone and political instability in the Middle East ultimately curtailed our profitability in the second half of the year, albeit a healthy increase in top line revenue was achieved across the year.

Revenue for the year was £53.3m (2010: £48.9m) an increase of 9.0%. After exceptional items, operating profits were £0.3m (2010: £1.0m) reflecting the significant investment made in bringing new client contracts on stream and opening the new office in Dubai. Our high tax charge is a non cash item which principally reflects the reduction in the carrying value of our deferred tax asset following the reduction in the UK corporation tax rate.

The cost base rose in 2011 in line with our expectations and our continued commitment to investing in the business. This investment has been rewarded through new client wins and 'approved adviser' panel appointments, ensuring that we remain at the forefront of our industry. Cash flow requirements have followed the increased business generation and therefore show a reduction in cash balances.

Stock & Inventory Systems & Services (SISS)

Tough trading conditions amplify the need for understanding the margins within a client's business and maintaining tight control over stock. This remains a detail-oriented business where the experience of our loyal staff benefits clients through the incisive nature of the reports generated from the stock audits. The integrity of the process and the subsequent profit enhancement are all the more appreciated at a time when profits are hard to come by in the first place.

Revenue was £25.9m (2010: £22.4m) with growth seen across all companies; Orridge, Venners and Vennersys.

SISS is now delivering management information to its clients which directly contributes to their strategic business planning. This degree of granular information and added value is unique and significantly valued by Christie Group's clients. New clients won in 2011 included Zara, Hobbycraft, Butlins, Tesco Pharmacy, BHS, Cairn Hotels, Park Resorts, Mecca and Murrayfield Stadium.

Professional Business Services (PBS)

Our PBS division had a creditable 2011 despite what could be considered a 'year of two halves' where, as referred to above, the Eurozone and Middle East problems affected UK market confidence in the second half.

Revenue for the year stood at £27.4m (2010: £26.5m). Quality assets and deals funded by cash were transacted with far greater ease than tired assets or those requiring significant bank support.

New clients won in the period included Southern Cross and von Essen Hotels (in Administration); with notable instructions from existing clients such as Punch Taverns, Enterprise Inns, Admiral Taverns and the Scottish & Newcastle Pub Company.

Christie Insurance benefited from its enlarged office in Ipswich working alongside the London-based team, whilst on an increasing number of occasions, Christie Finance incorporated European Investment Banking support for clients' deals and successfully arranged it in tandem with mainstream lending facilities.

Pinders' market is often driven by selective panel appointments and the company scores well with its national network and high level of professionally qualified staff. The market witnessed some fee erosion during the year but Pinders resisted pressure to reduce fees in pursuit of work. Good progress was made in its Building Services division, particularly project management services.

Outlook

Recommendations from established clients and fellow professionals result from having a business of longstanding pedigree, easily accessible local staff and a comprehensive web presence. These are qualities that are not easy for competitors to emulate.

We are pleased to announce that Christie + Co has been awarded the accolade of 'UK's most active agent' in the Leisure and Hotels category by the Estates Gazette for the second year in a row. This industry recognition is an encouraging confirmation of our strength in the market.

We believe that our market position is key to maximising the opportunities presented by both the recovering market on one hand and one showing signs of distress on the other. Our valuation and agency services are central to both de-gearing and transactional activity.

The pattern of this economic downturn is familiar to us given our experiences of the recession in the early 1990s. However, this downturn has different root causes. From our previous experiences we have a profound understanding of our own business, its base trading levels, the efficiency of our infrastructure and, importantly, the value in ensuring that we are attractive to our extended professional network and 'business ready'. The Group is ready for an upturn in the market and will benefit from the opportunity when markets open more fully.

Christie Group relies on supportive clients and the dedication of its quality personnel. It is thanks to them both that we hold our strong market position. I express my gratitude to our staff on behalf of the Board for their ongoing commitment and professionalism.

The year has started well. A brighter outlook combined with the profitability reported for 2011 enables the Board to recommend a final dividend of 0.5p per share (2011: 1.0p per share). If approved the dividend will be paid on 2 July 2012 to those shareholders on the register on 1 June 2012.

Philip Gwyn

Chairman

CHIEF EXECUTIVE'S REVIEW

Christie Group's strong revenue growth demonstrates a growing business with a sustained ability to deliver premium levels of client service. Given the prevailing economic climate this was a pleasing result and is testament to the underlying strength of our business model.

The Christie brand stands for in-depth, informed business intelligence. In tough times, proven expertise is in demand, and this plays to our strengths.

A balanced business

We are a balanced, diversified organisation. Our services add value at every stage in the lifecycle of a business, from start-up, through day-to-day operations, all the way to an eventual sale. We focus on three broad sectors - retail, care and leisure - where we have significant, in-depth knowledge.

Christie Group's portfolio of complementary companies matches a range of business requirements. The Group's two divisions each account for approximately half of total revenue. Professional Business Services focuses on assets and transactions. Stock & Inventory Systems & Services is concerned with operational efficiency.

Limiting exposure

We have built a naturally resilient organisation by spreading our exposure. We limit our risk to specific clients and sectors, and through our broad geographic reach.

Leading UK and international businesses are the most significant in value terms. The majority of our clients are small and medium-sized enterprises (SMEs). For transactional business and consultancy work, banks and administrators are increasingly important.

We are careful to avoid over-reliance on any one client. This approach is more than merely theoretical. We turn down unprofitable business and seek to avoid an over-reliance on any single contract or client.

Each of our three main sectors relates to the economic cycle differently. In leisure the economic climate has a marked impact on performance. There is a link too with the retail sector, but it is less direct. Our third major sector, care, is largely unaffected by what happens in the wider economy.

International operations

Our international network is helping us attract larger clients and win transnational contracts.

We build strong networks by focusing on deepening coverage as well as extending our reach. Christie + Co's new Lyon office is its fourth covering France while the new office in Vienna extends its influence eastwards and also links back to the German network.

Furthermore, the newly-opened Christie + Co office in Dubai will attract new investors and entrepreneurs in a region with a strong heritage in leisure and hospitality.

Orridge now coordinates activities in 18 European countries from its central base in Belgium.

High quality clients

We gained a succession of prestige clients and assignments during the year. High-profile wins included stocktaking contracts for BHS and Zara. Christie + Co handled the politically sensitive sale of Southern Cross freeholds, and several Christie Group companies were involved in the disposal of von Essen Hotels' 26 UK country house hotels for the Administrators.

Stock & Inventory Systems & Services

When margins are under pressure it focuses managers' minds on costs. They know that rigorous stock control can help streamline supply chains, protect against fraud and squeeze as much value as possible out of every single asset.

Increasingly, retailers are opting for outsourcing as the best way to guarantee quality and objectivity. This is good news for our highly respected stocktaking businesses. The pipeline for our retail business at the end of 2011 had increased significantly compared to December 2010.

Both companies gained important new clients during the year. Our stocktaking businesses tend to have strong client retention rates, but incur high initial costs. There is an acclimatisation period as we harmonise systems and adapt to each customer's processes.

We are investing in systems and training to service this extra demand. Venners, for example, spent £0.2m more than budgeted on training additional stocktakers. We are confident that these costs will be quickly recouped.

Professional Business Services

Transactional activity was inevitably affected by the global economic crisis. The economic uncertainty kept voluntary sellers away while distressed asset sales dominated activity.

A dearth of transactions in the first half of the year was balanced by improved fee income in the second six months. We won accolades from industry peers. The Estates Gazette named Christie + Co as both Property Adviser of The Year - Leisure and the most active agent in the leisure and hotel sector.

At the end of 2010 it had seemed probable that property prices had plateaued. Twelve months on, however, the picture looked very different. In retrospect, the stabilisation in 2010 was a pause for breath on a continued downward trajectory.

But it is important to recognise that, even at today's values, businesses are selling at multiples that were commonplace in the 1990s. These are not unprecedented levels and we are confident we can operate successfully in a low-growth environment.

In this generally subdued marketplace larger groups featured more prominently. Some were forced to scale down their portfolios to meet lenders' lower loan-to-value refinancing requirements. Others wanted to release capital to maintain and upgrade their core facilities.

For cash buyers wishing to build asset portfolios these were excellent conditions. We saw entrepreneurs who had sold their businesses at peak levels return to the market to acquire opportunities at substantial discounts.

The emergence of new sources of finance was a positive development. Many traditional lenders are constrained by their existing loan books. Recent arrivals in the markets have no such limitations. With property prices approaching historically low levels, they have the chance to build up high quality loan books.Liquidity in the commercial debt markets has remained an issue. However with initiatives such as the introduction of the Government's loan guarantee scheme announced in the Budget on 21 March 2012 we are hopeful that this may start to ease.

Our valuation and advisory businesses were in demand. Our specialist-based approach to valuation has been adopted as best practice. Our valuation professionals are RICS-qualified specialists. Early in the year the Royal Institute of Chartered Surveyors (RICS) introduced a licensing system requiring valuation professionals to register their specialist area of expertise. The new system will benefit us and improve standards for customers.

As the going got tough banks and owners came to us for specialist advice. They wanted to reshape portfolios, dispose of poorly performing units, review strategy, refinance and restructure.

Our finance business helped match new lenders with high quality borrowers. Our insurance business maintained its high client retention rate and benefitted from rising premiums.

Connecting with customers - and each other

These days, much of our intellectual property is vested in technology. Our customers expect to find more information online. The ubiquity of smartphones, tablets and 3G connectivity has been another game-changer. We now live in an always-online culture. Real-time information is available everywhere, at the touch of a button.

With many of our staff spending a lot of their time in the field, we saw the value of mobile communications early on. Our retail stocktakers use tablet technology to record, report and analyse stock levels while Christie + Co launched a mobile-friendly version of its website. We are also developing technologies to make our people more productive on the move and strengthen customer relationships. For example, we increasingly use more targeted marketing to produce better results and social media to supplement traditional communication channels.

RelocationI am pleased to advise that the Group's pension funds have acquired a dedicated new head office for our occupation in the City of London. We look forward to improved efficiency through combining our two separate existing London offices in this permanent home.

Looking ahead

I said last year that the economy faced setbacks on the road to recovery. These have come sooner rather than later and, so far at least, have been more significant than one might have hoped. But, having been spared any pre-Christmas adverse weather, activity levels in the early part of 2012 are improved compared with those in 2011.

Whatever the prospects for the economy, Christie Group is in a strong position. We have a manageable cost base and are investing in both systems and people to meet additional demand. We have a strong track record, a proven business model and a lengthening list of prestige clients. We are never complacent, but we do share confidence in the future.

David Rugg

Chief Executive

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2011

All the amounts derive from continuing activities.

Exceptional items represent the costs of new operations commenced during the year.

The 2010 results are restated to separately identify amounts recognised in the statement of comprehensive income in relation to the impairment of trade receivables, previously included within "Other operating expenses". No other changes have been made.

Consolidated Statement of Changes in Shareholders' Equity

As at 31 December 2011

Consolidated Statement of Financial Position

At 31 December 2011

These consolidated financial statements have been approved for issue by the Board of Directors

on 3 April 2012.

D B Rugg

Chief Executive

D R Prickett

Chief Financial Officer

Consolidated Statement of Cash Flows

For the year ended 31 December 2011

Notes to the Consolidated Financial Statements

1. BASIS OF PREPARATION

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in April 2012.

The accounting policies adopted are consistent with those applied in the 2010 financial statements.

New and amended standards adopted by the group

None of the new standards, interpretations and amendments, effective for the first time from 1 January 2011, have had a material effect on the financial statements of the Group or the Company.

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning after 1 January 2012 or later periods and have not been early adopted. It is anticipated that none of these new standards, interpretations and amendmentscurrently in issue at the time of preparing the financial statements (April 2012) will have a material effect on the consolidated financial statements of the Group, except for IAS 19 'Employee benefits' which becomes mandatory for the Group's 2013 consolidated financial statements.

IAS 19, 'Employee benefits' was amended in June 2011. The impact on the group will be as follows: to eliminate the corridor approach and recognise all actuarial gains and losses in Other Comprehensive Income as they occur; to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). The group does not plan to adopt this standard early and the extent of the impact will be assessed when the standard becomes effective. 

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

2.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimated impairment of goodwill

Goodwill is subject to an impairment review both annually and when there are indications that the carrying value may not be recoverable. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

(b) Retirement benefit obligations

The assumptions used to measure the expense and liabilities related to the Group's two defined benefit pension plans are reviewed annually by professionally qualified, independent actuaries, trustees and management as appropriate. Management base their assumptions on their understanding and interpretation of applicable scheme rules which prevail at the statement of financial position date. The measurement of the expense for a period requires judgement with respect to the following matters, among others:

- the probable long-term rate of increase in pensionable pay;

- the discount rate;

- the expected return on plan assets; and

- the estimated life expectancy of participating members.

The assumptions used by the Group may differ materially from actual results, and these differences may result in a significant impact on the amount of pension expense recorded in future periods. In accordance with IAS 19, the Group amortises actuarial gains and losses outside the 10% corridor, over the average future service lives of employees. Under this method, major changes in assumptions, and variances between assumptions and actual results, may affect retained earnings over several future periods rather than one period, while more minor variances and assumption changes may be offset by other changes and have no direct effect on retained earnings.

(c) Deferred taxation

Deferred tax assets are recognised to the extent that the Group believes it is probable that future taxable profit will be available against which temporary timing differences and losses from previous periods can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

3. SEGMENT INFORMATION

The Group is organised into two main operating segments: Professional Business Services and Stock & Inventory Systems & Services.

The segment results for the year ended 31 December 2011 are as follows:

The segment results for the year ended 31 December 2010 are as follows:

Other segment items included in the statements of comprehensive income for the years ended 31 December 2011 and 2010 are as follows:

The segment assets and liabilities at 31 December 2011 and capital expenditure for the year then ended are as follows:

The segment assets and liabilities at 31 December 2010 and capital expenditure for the year are as follows;

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash. They exclude taxation.

Segment liabilities comprise operating liabilities. They exclude items such as taxation and corporate borrowings.

Capital expenditure comprises additions to property, plant and equipment and intangible assets.

The Group manages its operating segments on a global basis. The UK is the home country of the parent. The Group's revenue is mainly generated in Europe. Revenue is allocated below based on the country in which the customer is located.

Capital expenditure is allocated based on where the assets are located.

4. FINANCE COSTS

5. TAXATION

The tax on the Group's profit/(loss) before tax differs from the theoretical amount that would arise using the standard tax rate of corporation tax in the UK of 26.5% as follows:

Tax on profit on ordinary activities

During the year, as a result of the change in the UK corporation tax rate, the opening deferred tax balances have been re-measured. Deferred tax assets recognised at 1 January 2011 which had been measured at 27% at 31 December 2010 have been re-measured using the enacted rate that will apply at 31 December 2012 (25%).

6.DIVIDENDS

A dividend in respect of the year ended 31 December 2011 of 0.5p per share, amounting to a total dividend of £124,000, is to be proposed at the Annual General Meeting on 13 June 2012. These financial statements do not reflect this proposed dividend.

7. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, which excludes the shares held in the Employee Share Ownership Plan (ESOP) trust.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options.

The calculation is performed for the share options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

8. NOTES TO THE CASH FLOW STATEMENT

Cash (used in)/generated from operations

9. RECONCILIATION OF MOVEMENT IN NET FUNDS

Financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under either Section 498(2) or (3) of the Companies Act 2006.

Report and Accounts

Copies of the 2011 Annual Report and Accounts will be posted to shareholders in late April. Further copies may be obtained by contacting the Company Secretary at the registered office. Alternatively, the 2011 Annual Report and Accounts will be available to download from the investor relations section on the Company's website www.christiegroup.com 

Key dates

The Annual General Meeting of the Company is scheduled to take place at 10.30am on Wednesday 13 June 2012 at Whitefriars House, 6 Carmelite Street, London, EC4Y 0BS.

Professional Business Services

Christie + Co is the leading specialist firm providing business intelligence in the hospitality, leisure, retail and care sectors. With offices across the UK, it focuses on agency, valuation services, investment and consultancy activity in its key sectors. Internationally, it operates from offices in the UK, Austria, Finland, France, Germany, Spain and the United Arab Emirates.

www.christie.com

www.christiecorporate.com

Christie Finance has over 30 years' experience in financing businesses in the hospitality, leisure, care and retail sectors. Its excellent relationships with the clearing banks, centralised lenders, finance houses and building societies make it the market leader in providing finance solutions for purchase or re-financing in its specialist sectors.

www.christiefinance.com

With over 30 years' experience arranging business insurance in the hospitality, leisure, care and retail sectors, Christie Insurance is a leading company in its markets. Its excellent contacts with the UK's leading insurers enable it to provide a premier service including tailored insurance schemes.

www.christieinsurance.com

Pinders is the UK's leading specialist business appraisal, valuation and consultancy company, providing professional services to the licensed leisure, retail and care sectors, and also the commercial and corporate business sectors. Its Building Consultancy Division offers a full range of project management, building monitoring and building surveying services.

www.pinders.co.uk

www.pinderpack.com

Europe's longest established stocktaking business specialising in all fields of retail stocktaking including high street, warehousing and factory. It also has a specialised pharmacy division providing valuation and stocktaking services. A full range of stocktaking and inventory management solutions is provided for a wide range of clients in the UK and Europe.

www.orridge.co.uk

VennersThe leading supplier of stocktaking, inventory, consultancy services and related stock management systems to the hospitality sector. Consultancy services include control audits, 'live' event stocktaking and Health & Safety implementation and control. Bespoke software and systems enable real-time management reporting to customers using the best available technologies.

www.venners.com

VennersysVennersys operates in the UK and North America and delivers turnkey EPoS and ticketing systems to visitor attractions such as historic houses and estates, museums, zoos, safari parks, aquaria and cinemas.

www.vennersys.com