Last checked at 27 Mar 2009 07:00
27 March 2009
Christie Group plc
Audited Preliminary Results for the year ended 31 December 2008
Christie Group plc ('Christie' 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 final results for the year ended 31 December 2008.
- Business reorganised to reduce costs
- Refocused to reflect current market conditions
- Timely disposal of loss-making IT business for €4 million
- Group overall debt-free, after repaying all bank loans
- Tax credit expected of approximately £1.0 million
- No final dividend
Commenting on the results, Philip Gwyn, Chairman of Christie Group said:
"2009 will undoubtedly be a difficult year. That said, we are seeing increasing numbers of buyers returning to the market with cash and low gearing levels who are in a position to take advantage of favourable asset prices at this stage of the economic cycle. Pleasingly, our Stock & Inventory Systems & Services division remains a solid performer, growing in 2008 despite a difficult trading environment.
"As the Government stimulates the debt markets, we expect an increase in trading activity to more normalised levels."
Enquiries:
David Rugg 020 7227 0707
Chief Executive
Christie Group plc
Philip Davies 020 7149 6000
Charles Stanley Securities
Nominated Adviser
Tom Cooper 0797 122 1972
Winningtons
Notes to Editors
Christie Group plc (CTG.L), quoted on AIM, is a leading professional business services group with 37 offices across the UK, Europe and Canada, catering to its specialist markets in the Leisure, Retail and Care sectors.
Christie Group operates in two complementary business divisions: Professional Business Services (PBS) and Stock & Inventory Systems & Services (SISS). These divisions trade under the brand names: PBS - Christie + Co 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 provides a natural balance to the Group's core agency business.
For more information, please go to www.christiegroup.com.
Chairman's Statement
Transaction volumes pass the nadir
The challenging and widely reported trading conditions, which affected most sectors of the economy during 2008, continue in 2009. Christie Group has not been immune from these conditions and has experienced an exceptionally difficult year, as detailed in the update released on 5 December 2008. The Board has acted swiftly to address the challenges faced by the Group, reducing costs and refocusing the activities of the complementary operating divisions.
Notwithstanding these actions, and a reported profit after tax at the half year of £0.9 million, I have to report a trading loss on continuing activities, before exceptional items and after attributable tax of £1.99 million (2007: profit of £7.7 million). In addition we had £2.0 million of exceptional reorganisation costs, to tailor the business for current market conditions. The results reflect the severity of the second half downturn and I would, in particular, cite the period of the Lehman Brothers' collapse in September as the point at which confidence in the business sales market showed a dramatic downturn. The losses should allow us to receive a tax repayment of approximately £1.0 million. At 31 December 2008, after having repaid all loans, we held net cash balances of £1.6 million. The Group remains ungeared.
Recognising the signs of a downturn in our property business markets, the Board decided to dispose of the loss-making IT business to negate the need for further investment. Despite the very difficult conditions in which to conduct a business sale, we disposed of it in September 2008 for a consideration of €4 million, which resulted in a net one-off loss on disposal of £6.2 million.
In order to conserve cash, the Board does not propose to recommend a final dividend for 2008 (2007: 2.75 pence) per share in addition to the interim dividend already paid of 0.5 pence (2007:1.5 pence) per share.
Our capital expenditure requirements for 2009 are limited and comfortably covered by our depreciation charge. We have no outstanding capital commitments.
Professional Business Services
Operating in the leisure, retail and care sectors, our current sources of revenue are well diversified. We derive income from a variety of different services including: property acquisition and disposal; portfolio and individual asset valuation; feasibility studies; operator reviews; operator search and selection; investment advice; alternative use value options; project management; building surveying; finance and insurance.
No one client accounts for more than 2% of our revenue. We carry out over 10,000 billable assignments each year on behalf of more than 5,000 clients. In 2008, we lived through a rapid deceleration and decline in transactional volumes in the business property market that became even more pronounced in the final quarter of the year. Values fell as trading prospects declined and activity levels now mirror those reached in the first quarter of 1991, the low point from which we recovered in the early 1990s. We believe we have gained market share as competitors have ceased trading and general practice firms have substantially reduced their activity in our niche areas of operation.
Christie + Co's newly re-established Bank Support and Business Recovery division is performing well, servicing an active sector in a market where businesses are under pressure and banks require specialist advice to reduce risk and maximise value. Christie Finance is busy as loans are now less freely available and an intermediary, with the relevant business sector experience, is frequently required to assist in the process.
Stock & Inventory Systems & Services
The Group has been aided by its stocktaking businesses which remain profitable and stable, with a large percentage of revenues being of a recurring nature.
As many companies choose to focus on making further improvements to operating efficiencies in the current climate, the division continues to add new clients. Some recent additions to the client list include 3D Entertainment, Enterprise Inns, Johnson & Johnson and Black Leisure Group. Our stock auditors help clients to discover and eliminate stock losses as well as providing stock control systems, which can help businesses to improve their margins and increase profitability. Retail clients are keen to minimise stock holdings, whilst ensuring continued availability at store level.
The Board
It was with sadness that we announced the death of Lord Lane of Horsell, our senior Non Executive Director, on 9 January 2009. He was highly respected by his colleagues and will be sadly missed. We are grateful for his valued counsel during his 15 years on the Christie Group Board.
2009 Outlook
In the current challenging market conditions, our Group-wide portfolio of logically related services is appreciated more highly. We coordinate our services, often at very short notice, to provide one-stop support to our clients.
We are already receiving significant work from the banks and insolvency practitioners, acting to support their collateral reviews and refinancing activities. We expect insolvency and associated reconstruction and advisory work to keep us busy throughout 2009 and beyond.
The Treasury recently announced the Asset Protection Scheme, which aims to provide banks with greater confidence to rebuild and restructure their operations and increase lending in the economy. The Royal Bank of Scotland has agreed to participate in the scheme, making 2009 lending commitments totalling £25 billion - £9 billion of which will be mortgage lending and £16 billion of business lending. Lloyds Banking Group has also agreed to participate in the scheme, making lending commitments totalling £3 billion of mortgage lending and £11 billion of business lending over a 12-month period. We believe that this substantial increase in lending to both homeowners and businesses will have a positive impact on activity levels in the market for UK business property.
The Government has also offered further support to small businesses. The Small Firm Loans Guarantee scheme has been replaced by the Enterprise Finance Guarantee Scheme, securing up to £1.3 billion of additional bank loans to small firms with a turnover of up to £25 million. Christie Finance is confident that small businesses will take advantage of this improved government guarantee scheme to secure the funding they need to respond to the many current acquisition opportunities.
Trading conditions have put tremendous pressure on all our staff. They have responded with the professionalism and enthusiasm which both I and our clients would expect of them, and for which I am very grateful.
The business markets we serve support both a corporate community and also a vast number of the country's privately owned, property-based businesses. We are witness to a new generation of entrepreneurs seeking to control both their future careers and their families' well-being. As we continue to serve both well, I believe the future for our business is secure.
Philip Gwyn
26 March 2009
Chief Executive's Statement
In a testing year, Christie Group has demonstrated its resilience and flexibility. We saw a reduction in turnover by 16.3% compared with 2007's excellent performance. This was partly because of the disposal of our retail software business, but it was also the inevitable consequence of some of the most turbulent market conditions seen for at least a generation. In that context the £1.99 million trading loss before exceptional items and after attributable tax for 2008 can be seen as a creditable performance and one which would have been worse without our management team's prompt action.
The speed and severity of the downturn took most people by surprise, but for those of us with longer memories it followed a familiar pattern. Christie Group is fortunate that several of its directors have had the experience of navigating this business through challenging economic landscapes on previous occasions. We are not taking anything for granted but carefully analysing everything we do and adapting wherever necessary or desirable. Each time we have been through this kind of experience, the business has emerged not just unscathed, but strengthened by it.
Unsurprisingly, given the adverse economic conditions, our Professional Business Services Division fell short of its revenue target. Divisional revenue fell to £36.9 million (2007: £51.2 million). This was partially offset by a strong performance in the Stock & Inventory Systems & Services Division with revenue increasing to £26.5 million (2007: £24.9 million).
It is never easy to manage a business in a hostile economic climate, but one thing we have learnt is that by acting swiftly we avert the need to take more difficult decisions at a later stage.
We have moved rapidly to bring down our cost base. We were quick off the blocks in eliminating duplication and minimising excess capacity. We have scaled back non-core operations and initiated an appropriate redundancy programme. We have restructured our finance and insurance businesses and closed down our corporate finance operation. Running costs are now reduced in line with lower levels of activity.
As previously announced, we also disposed of VCSTIMELESS our retail software business during the year. This aside, we have been careful to maintain our strong presence through our network of UK and international offices. We know from experience that regional representation is a key competitive advantage for us.
One of our greatest assets is our ability to understand our customers, their businesses and their markets in great depth. This allows us to act quickly to identify opportunities and respond to market trends. This year, for instance, it was clear that banks would have more distressed assets on their balance sheets and would require specialist advice to re-invigorate or replace existing management or maximise the value of these assets on disposal. We re-established our Bank Support and Business Recovery Unit to service the banks' needs using the transferable skills of our corporate, advisory and consultancy teams.
Our expertise and understanding have been hard-won over many years and are unmatched by any of our competitors. Our strategy seeks to reinforce our strengths as specialists. We continue to deepen our knowledge and focus our business on our three core sectors - hospitality, retail and care. We are already firmly established in several European territories. We aim to grow our services methodically rather than expanding too swiftly geographically.
Christie Group today is a focused and balanced organisation. Our two divisions, Professional Business Services and Stock & Inventory Systems & Services, provide complementary services to businesses in each of our three core sectors.
Our sector focus reduces the Group's cyclical exposure. Earnings in the hospitality sector are closely correlated to economic performance and these can be volatile. However, the care sector is needs based; revenues here are more stable and current demographic trends indicate a growing market need. The retail sector falls between these two extremes.
In difficult markets the value of our high-quality advice is better appreciated. We expect to increase the range of our consultancy activities and grow our market share - especially with banks when dealing with distressed businesses. They recognise that expert advisers who understand the dynamics of these markets can best facilitate the process of marketing, managing and disposing of their assets.
These are challenging times, but we are well placed competitively and are one of the very few specialist practices with no debt.
We are market leaders in our chosen sectors. Christie + Co is the UK's largest specialist business valuation and agency business, Pinders is the UK's largest business appraiser and Orridge provides the UK's largest retail stocktaking service and Venners is the UK's largest Hospitality stock auditor.
Our income is generated from professional, financial and business services in niche areas where our leading brands enjoy strong recognition. We have a broad and loyal client base and a pan-European footprint.
Difficult trading conditions can also bring unexpected benefits, such as the opportunity to attract additional expertise. During challenging times in the past, we have strengthened the Group with the addition of companies and teams that had previously been our competitors. We will remain alert to such opportunities.
There will be tricky economic terrain to navigate in the coming months. However, I am confident that, as with previous downturns, our business will negotiate these challenges and emerge stronger when normal economic conditions begin to reassert themselves.
Consolidated Income Statement
For the year ended 31 December 2008
| | Note | 2008 £’000 | 2007 £’000 |
| Continuing operations | | | |
| Revenue | 3 | 63,422 | 76,099 |
| Employee benefit expenses* | | (45,014) | (44,310) |
| | | 18,408 | 31,789 |
| Depreciation and amortisation | 3 | (906) | (1,033) |
| Other operating expenses* | | (22,140) | (19,887) |
| Operating (loss)/profit | 3 | (4,638) | 10,869 |
| Finance costs | 5 | (162) | (149) |
| Finance income | 5 | 227 | 363 |
| Total finance credit | 5 | 65 | 214 |
| (Loss)/profit before tax | | (4,573) | 11,083 |
| Taxation | 6 | 1,173 | (3,361) |
| (Loss)/profit from continuing operations | | (3,400) | 7,722 |
| Discontinued operations | | | |
| - Loss from discontinued operations | 7 | (10,163) | (3,074) |
| (Loss)/profit for the year after tax | | (13,563) | 4,648 |
| | | | |
| | | | |
| Earnings per share - pence | | | |
| (Loss)/profit attributable to the equity holders of the Company | |||
| -Basic | 9 | (55.39) | 19.12 |
| -Fully diluted | 9 | (55.39) | 18.65 |
| (Loss)/profit from continuing operations attributable to the equity holders of the Company | |||
| -Basic | 9 | (13.88) | 31.76 |
| -Fully diluted | 9 | (13.88) | 30.99 |
* These include £1,964,000 (2007: £nil) of exceptional reorganisation costs.
Consolidated Statement of Changes in Shareholders' Equity
As at 31 December 2008
| Attributable to the Equity Holders of the Company | | | ||||
| | Share capital £’000 | Fair value and other reserves £’000 | Cumulative translation reserve £’000 | Retained earnings £’000 | | Total equity £’000 |
| Balance at 1 January 2007 | 504 | 4,410 | (382) | 8,001 | | 12,533 |
| Exchange difference on repayment of foreign exchange loan | - | - | (27) | 27 | | - |
| Currency translation adjustments | - | - | 546 | - | | 546 |
| Net income recognised directly in equity | - | - | 519 | 27 | | 546 |
| Profit for the year | - | - | - | 4,648 | | 4,648 |
| Total recognised income for the year | - | - | 519 | 4,675 | | 5,194 |
| Issue of share capital | 1 | 33 | - | - | | 34 |
| Movement in respect of employee share scheme | - | (858) | - | (30) | | (888) |
| Employee share option scheme: | | | | | | |
| - value of services provided | - | 121 | - | - | | 121 |
| Dividends paid | - | - | - | (1,030) | | (1,030) |
| Balance at 1 January 2008 | 505 | 3,706 | 137 | 11,616 | | 15,964 |
| Exchange difference on repayment of foreign exchange loan | - | - | (758) | 758 | | - |
| Currency translation adjustments | - | - | 1,102 | - | | 1,102 |
| Net income recognised directly in equity | - | - | 344 | 758 | | 1,102 |
| Loss for the year | - | - | - | (13,563) | | (13,563) |
| Total recognised income/(expenses) for the year | - | - | 344 | (12,805) | | (12,461) |
| Release of merger reserve | - | (945) | - | 945 | | - |
| Movement in respect of employee share scheme | - | 72 | - | (28) | | 44 |
| Employee share option scheme: | | | | | | |
| - value of services provided | - | 98 | - | - | | 98 |
| Dividends paid | - | - | - | (794) | | (794) |
| Balance at 31 December 2008 | 505 | 2,931 | 481 | (1,066) | | 2,851 |
Consolidated Balance Sheet
As at 31 December 2008
| | Note | 2008 £’000 | 2007 £’000 |
| Assets | | | |
| Non-current assets | | | |
| Intangible assets – Goodwill | | 1,011 | 4,096 |
| Intangible assets – Other | | 60 | 4,555 |
| Property, plant and equipment | | 1,409 | 1,796 |
| Deferred tax assets | | 2,063 | 2,664 |
| Available-for-sale financial assets | | 300 | 300 |
| Other receivables | | 1,108 | 1,088 |
| | | 5,951 | 14,499 |
| Current assets | | | |
| Inventories | | - | 404 |
| Trade and other receivables | | 9,506 | 13,248 |
| Current tax assets | | 596 | - |
| Cash and cash equivalents | | 2,328 | 10,593 |
| | | 12,430 | 24,245 |
| Total assets | | 18,381 | 38,744 |
| Equity | | | |
| Capital and reserves attributable to the Company’s equity holders | | ||
| Share capital | | 505 | 505 |
| Fair value and other reserves | | 2,931 | 3,706 |
| Cumulative translation reserve | | 481 | 137 |
| Retained earnings | | (1,066) | 11,616 |
| Total equity | | 2,851 | 15,964 |
| Liabilities | | | |
| Non-current liabilities | | | |
| Borrowings | | - | 1,275 |
| Retirement benefit obligations | | 3,225 | 4,343 |
| Provisions for other liabilities and charges | | 1,751 | 432 |
| | | 4,976 | 6,050 |
| Current liabilities | | | |
| Trade and other payables | | 9,289 | 15,545 |
| Borrowings | | 706 | 468 |
| Current tax liabilities | | - | 700 |
| Provisions for other liabilities and charges | | 559 | 17 |
| | | 10,554 | 16,730 |
| Total liabilities | | 15,530 | 22,780 |
| Total equity and liabilities | | 18,381 | 38,744 |
These Consolidated financial statements have been approved for issue by the Board of Directors
on 26 March 2009.
D B Rugg
Chief Executive
R M Zenker
Finance Director
Consolidated Cash Flow Statement
For the year ended 31 December 2008
| | Note | 2008 £’000 | 2007 £’000 |
| Cash flow from operating activities | | | |
| Cash (used in)/generated from operations | 10 | (5,254) | 7,952 |
| Interest paid | | (163) | (149) |
| Tax paid | | (21) | (2,036) |
| Net cash (used in)/generated from operating activities | | (5,438) | 5,767 |
| Cash flow from investing activities | | | |
| Purchase of property, plant and equipment (PPE) | | (1,103) | (786) |
| Proceeds from sale of PPE | | 204 | 41 |
| Intangible asset expenditure | | (1,590) | (2,485) |
| Proceeds from sales of Software businesses (net of costs) | | 1,797 | - |
| Cash included in disposal of Software businesses | | (749) | - |
| Investment in an available-for-sale asset | | (19) | (9) |
| Interest received | | 227 | 363 |
| Net cash used in investing activities | | (1,233) | (2,876) |
| Cash flow from financing activities | | | |
| Proceeds from issue of share capital | | - | 34 |
| Net payments to ESOP | | (172) | (1,976) |
| Repayment of borrowings | | (1,735) | (477) |
| Proceeds from invoice discounting | | 700 | - |
| Payments of finance lease liabilities | | (2) | (9) |
| Dividends paid | | (794) | (1,030) |
| Net cash used in financing activities | | (2,003) | (3,458) |
| Net decrease in net cash | | (8,674) | (567) |
| Cash and cash equivalents at beginning of year | | 10,593 | 11,160 |
| Exchange gains on euro bank accounts | | 409 | - |
| Cash and cash equivalents at end of year | | 2,328 | 10,593 |
Notes to the Consolidated Financial Statements
1. BASIS OF PREPARATION
The consolidated and Company financial statements of Christie Group plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs as adopted by the EU). IFRIC Interpretations and the Companies Act 2006 applicable to Companies reporting under IFRS. These consolidated and Company financial statements have been prepared under the historical cost convention and on a going concern basis.
The financial statements have been prepared in accordance with IFRS and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (March 2009).
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and parent company statements are disclosed in Note 2.
Interpretations and amendments to published standards effective in 2008
The following amendments and interpretations to standards are mandatory for the Group's accounting periods beginning on or after 1 January 2008.
IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction', provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. This interpretation does not have any impact on the Company's financial statements as the Group has a pension deficit and is not subject to any minimum funding requirements.
IFRIC 11, 'IFRS 2 - Group and treasury share transactions', provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example options over a parent's shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. This interpretation does not have an impact on the Company's financial statements. The Company's accounting policy for share based compensation arrangements is already in compliance with the interpretation.
It is anticipated that mandatory new standards or interpretations, effective for accounting periods beginning on or after 1 January 2008, not covered specifically above will have no impact on the Group's financial statements.
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 Company's accounting periods beginning on or after 1 January 2009 or later periods and have not been early adopted. It is anticipated that these new standards, amendments and interpretations, currently in issue at the time of preparing these financial statements (March 2009) will have no material impact on the Company's financial statements.
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.
21 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, in accordance with the accounting policy. 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. 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.
3. SEGMENT INFORMATION
a. Primary reporting format - business segments
The Group is organised into two main business segments: Professional Business Services and Stock & Inventory Systems & Services.
The segment results for the year ended 31 December 2008 are as follows:
| | Professional Business Services £’000 | Stock & Inventory Systems & Services £’000 | Other £’000 | Total continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Total gross segment sales | 37,011 | 26,515 | 2,941 | 66,467 | 9,691 | 76,158 |
| Inter-segment sales | (104) | - | (2,941) | (3,045) | - | (3,045) |
| Revenue | 36,907 | 26,515 | - | 63,422 | 9,691 | 73,113 |
| Operating (loss)/profit before exceptional items | (3,396) | 564 | 158 | (2,674) | (3,162) | (5,836) |
| Exceptional items | (1,964) | - | - | (1,964) | - | (1,964) |
| Net loss on disposal of Retail Software business | - | - | - | - | (6,193) | (6,193) |
| Operating (loss)/profit after exceptional items | (5,360) | 564 | 158 | (4,638) | (9,355) | (13,993) |
| Net finance credit/(costs) | | | | 65 | (1) | 64 |
| Loss before tax | | | | (4,573) | (9,356) | (13,929) |
| Taxation | | | | 1,173 | (807) | 366 |
| Loss for the year after tax | | | | (3,400) | (10,163) | (13,563) |
The segment results for the year ended 31 December 2007 are as follows:
| | Professional Business Services £’000 | Stock & Inventory Systems & Services £’000 | Other £’000 | Total continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Total gross segment sales | 51,253 | 24,946 | 2,913 | 79,112 | 11,273 | 90,385 |
| Inter-segment sales | (100) | - | (2,913) | (3,013) | - | (3,013) |
| Revenue | 51,153 | 24,946 | - | 76,099 | 11,273 | 87,372 |
| Operating profit/(loss) | 10,261 | 813 | (205) | 10,869 | (3,868) | 7,001 |
| Net finance credit | | | | 214 | - | 214 |
| Profit/(loss) before tax | | | | 11,083 | (3,868) | 7,215 |
| Taxation | | | | (3,361) | 794 | (2,567) |
| Profit/(loss) for the year after tax | | | | 7,722 | (3,074) | 4,648 |
Other segment items included in the income statements for the years ended 31 December 2008 and 2007 are as follows:
| | Professional Business Services £’000 | Stock & Inventory Systems & Services £’000 | Other £’000 | Total continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| 31 December 2008 | | | | | | |
| Depreciation and amortisation | 383 | 492 | 31 | 906 | 244 | 1,150 |
| Impairment of trade receivables | 856 | 36 | - | 892 | 43 | 935 |
| 31 December 2007 | | | | | | |
| Depreciation, amortisation and impairment | 402 | 554 | 77 | 1,033 | 1,540 | 2,573 |
| Impairment of trade receivables | 469 | 14 | - | 483 | (121) | 362 |
The segment assets and liabilities at 31 December 2008 and capital expenditure for the year then ended are as follows:
| | Professional Business Services £’000 | Stock & Inventory Systems & Services £’000 | Other £’000 | Total continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Assets | 6,413 | 6,135 | 3,174 | 15,722 | - | 15,722 |
| Deferred tax assets | | | | | | 2,063 |
| Current tax assets | | | | | | 596 |
| | | | | | | 18,381 |
| Liabilities | 8,721 | 5,144 | 965 | 14,830 | - | 14,830 |
| Borrowings (excluding finance leases) | | | | | | 700 |
| | | | | | | 15,530 |
| | | | | | | |
| Capital expenditure | 532 | 363 | 8 | 903 | 1,790 | 2,693 |
The segment assets and liabilities at 31 December 2007 and capital expenditure for the year are as follows:
| | Professional Business Services £’000 | Stock & Inventory Systems & Services £’000 | Other £’000 | Total continuing operations £’000 | Discontinued operations £’000 | Group £’000 | |
| Assets | 10,614 | 6,877 | 8,812 | 26,303 | 9,777 | 36,080 | |
| Deferred tax assets | | | | | | 2,664 | |
| | | | | | | 38,744 | |
| Liabilities | 9,669 | 4,177 | 2,755 | 16,601 | 3,744 | 20,345 | |
| Current tax liabilities | | | | | 700 | ||
| Borrowings (excluding finance leases) | | | | | 1,735 | ||
| | | | | | | 22,780 | |
| | | | | | | | |
| Capital expenditure | 277 | 352 | 2 | 631 | 2,667 | 3,298 | |
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.
b. Secondary reporting format - geographical segments
The Group manages its business segments on a global basis. The UK is the home country of the parent. The Group's revenue is mainly in Europe. Revenue is allocated based on the country in which the customer is located.
| | 31 December 2008 | 31 December 2007 | ||||
| | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Revenue | | | | | | |
| Europe | 62,508 | 9,691 | 72,199 | 75,825 | 11,273 | 87,098 |
| Rest of the World | 914 | - | 914 | 274 | - | 274 |
| | 63,422 | 9,691 | 73,113 | 76,099 | 11,273 | 87,372 |
| | | | | | | |
| Total segment assets are allocated based on where the assets are located. | ||||||
| | 31 December 2008 | 31 December 2007 | ||||
| | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Total segment assets | | | | | | |
| Europe | 14,837 | - | 14,837 | 26,212 | 9,777 | 35,989 |
| Rest of the World | 885 | - | 885 | 91 | - | 91 |
| | 15,722 | - | 15,722 | 26,303 | 9,777 | 36,080 |
| | 31 December 2008 | 31 December 2007 | ||||
| | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Capital expenditure | | | | | | |
| Europe | 903 | 1,790 | 2,693 | 630 | 2,667 | 3,297 |
| Rest of World | - | - | - | 1 | - | 1 |
| | 903 | 1,790 | 2,693 | 631 | 2,667 | 3,298 |
| | 31 December 2008 | 31 December 2007 | ||||
| | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 | Continuing operations £’000 | Discontinued operations £’000 | Group £’000 |
| Analysis of revenue by category | | | | | | |
| Sale of goods | 405 | 2,836 | 3,241 | 546 | 3,885 | 4,431 |
| Revenue from services | 63,017 | 6,855 | 69,872 | 75,553 | 7,388 | 82,941 |
| | 63,422 | 9,691 | 73,113 | 76,099 | 11,273 | 87,372 |
4. EXCEPTIONAL ITEMS
During the year the Group incurred £1,964,000 (2007: £nil) of exceptional reorganisation costs.
5. FINANCE (CREDIT)/COSTS
| 2008 £'000 | 2007 £'000 | |
| Interest payable on bank loans and overdrafts | 127 | 146 |
| Other interest payable | 34 | 2 |
| Interest payable on finance leases | 1 | 1 |
| Total finance costs | 162 | 149 |
| Bank interest receivable | (178) | (352) |
| Other interest receivable | (49) | (11) |
| Total finance income | (227) | (363) |
| Net finance credit - continuing operations | (65) | (214) |
| Discontinued operations interest payable | 1 | - |
| Net finance credit | (64) | (214) |
6. TAXATION
| 2008 £'000 | 2007 £'000 | |
| Current tax | ||
| UK Corporation tax at 28% (2007: 30%) | (981) | 3,058 |
| Foreign tax | - | 29 |
| Adjustment in respect of prior periods | - | (15) |
| Total current tax | (981) | 3,072 |
| Deferred tax | ||
| Origination and reversal of timing differences | (192) | (528) |
| Unutilised losses surrendered on disposal | 807 | - |
| Impact of change in UK tax rate | - | 145 |
| Adjustment in respect of prior periods | - | (122) |
| Total deferred tax | 615 | (505) |
| Tax on (loss)/profit on ordinary activities | (366) | 2,567 |
The tax (credit)/charge is split between continuing and discontinued activities as follows:
| 2008 £'000 | 2007 £'000 | |
| Continuing operations | (1,173) | 3,361 |
| Discontinued operations | 807 | (794) |
| (366) | 2,567 |
The (credit)/charge for the year is lower (2007: higher) than the standard rate of corporation tax in the UK (28% (2007:30%)). The differences are explained below:
Tax on (loss)/profit on ordinary activities
| 2008 £'000 | 2007 £'000 | |
| (Loss)/profit on ordinary activities before tax | (13,929) | 7,215 |
| (Loss)/profit on ordinary activities at standard rate of UK corporation tax of 28% (2007: 30%) | (3,900) | 2,165 |
| Effects of: | ||
| - tax losses not yet utilised | 648 | 672 |
| - expenses not deductible for tax purposes | 2,605 | 228 |
| - taxable deductions | (393) | (379) |
| - utilisation of tax losses and other deductions | - | (18) |
| - adjustment to tax charge in respect of previous periods | - | (137) |
| - fixed asset timing differences | 6 | (14) |
| - other timing differences | 119 | 433 |
| - rate differential on certain tax losses | (66) | - |
| - origination and reversal of timing differences | (192) | (528) |
| - unutilised losses surrendered on disposal | 807 | - |
| - impact of change in UK tax rate | - | 145 |
| Total tax (credit)/charge | (366) | 2,567 |
7. DISCONTINUED OPERATIONS
The results of the discontinued operations are summarised below:
| 2008 £'000 | 2007 £'000 | |
| Profit on disposal of Retail Software business | 2,135 | - |
| Fair value adjustment of Retail Software business assets | (8,328) | - |
| Net loss on disposal of Retail Software business | (6,193) | - |
| Loss for the year after tax of the Retail Software business | (3,794) | (2,734) |
| Total loss of the Retail Software business | (9,987) | (2,734) |
| Loss for the year after tax of Christie Corporate Finance | (176) | (340) |
| (10,163) | (3,074) |
7A. RETAIL SOFTWARE BUSINESS
On 30 September 2008 the Group completed the disposal of its Retail Software business for consideration of €4,000,000 cash, translating to £3,164,000 on exchange. Associated costs of disposal were £1,367,000, with net liabilities on disposal amounting to £338,000, resulting in a profit on disposal of £2,135,000 as set out below:
| £'000 | |
| Consideration received | 3,164 |
| Costs | (1,367) |
| Net liabilities at 30 September 2008 | 338 |
| Profit on disposal | 2,135 |
Prior to the completion of the disposal of the Software business an adjustment to fair values was recognised of £8,328,000 as follows:
| £'000 | ||
| Intangible assets - Goodwill | 3,085 | |
| Intangible assets - Other | 4,566 | |
| Current tax assets | 677 | |
| 8,328 |
The results for the Retail Software business are presented below:
| 2008 £'000 | 2007 £'000 | |
| Revenue | 9,671 | 11,014 |
| Employee benefit expenses | (7,692) | (7,905) |
| 1,979 | 3,109 | |
| Depreciation, amortisation and impairment | (244) | (1,540) |
| Other operating expenses | (4,722) | (5,097) |
| Operating loss | (2,987) | (3,528) |
| Taxation | (807) | 794 |
| Loss for the period after tax | (3,794) | (2,734) |
The net cash flows after tax of this discontinued operation are as follows:
| 2008 £'000 | 2007 £'000 | |
| Operating activities | (332) | 1,981 |
| Investing activities | (742) | (2,668) |
| Net cash outflow | (1,074) | (687) |
7B. CHRISTIE CORPORATE FINANCE
On 1 August 2008 Christie Corporate Finance was closed. This was previously included in the Professional Business Services segment. From this date it has been classified as a discontinued operation.
The results for Christie Corporate Finance are presented below:
| 2008 £'000 | 2007 £'000 | |
| Revenue | 20 | 259 |
| Employee benefit expenses | (168) | (377) |
| (148) | (118) | |
| Other operating expenses | (27) | (222) |
| Operating loss | (175) | (340) |
| Total finance costs | (1) | - |
| Loss for the period | (176) | (340) |
8. DIVIDENDS
| Group and Company | 2008 £'000 | 2007 £'000 |
| Interim | ||
| 2007 interim, paid October 2007 (1.50p) | - | 362 |
| 2008 interim, paid October 2008 (0.50p) | 123 | - |
| Final | ||
| 2006 final, paid June 2007 (2.75p) | - | 668 |
| 2007 final, paid June 2008 (2.75p) | 671 | - |
| 794 | 1,030 |
9. 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.
| 31 December 2008 £'000 | 31 December 2007 £'000 | |
| (Loss)/profit from continuing operations attributable to equity holders of the Company | (3,400) (10,163) | 7,722 (3,074) |
| Loss from discontinued operations attributable to equity holders of the Company | ||
| (Loss)/profit from total operations attributable to equity holders of the Company | (13,563) | 4,648 |
| 31 December 2008 Thousands | 31 December 2007 Thousands | |
| Weighted average number of ordinary shares in issue | 24,486 74 | 24,310 610 |
| Adjustment for share options | ||
| Weighted average number of ordinary shares for diluted earnings per share | 24,560 | 24,920 |
| 31 December 2008 Pence | 31 December 2007 Pence | |
| Basic earnings per share | ||
| Continuing operations | (13.88) (41.51) | 31.76 (12.64) |
| Discontinued operations | ||
| Total operations | (55.39) | 19.12 |
| Fully diluted earnings per share | ||
| Continuing operations | (13.88) | 30.99 |
| Discontinued operations | (41.51) | (12.34) |
| Total operations | (55.39) | 18.65 |
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 basic and diluted loss per share is the same, as the exercise of share options would reduce the loss per share and is, therefore, anti-dilutive.
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.
10. NOTES TO THE CASH FLOW STATEMENT
Cash (used in)/generated from operations
| 2008 £'000 | Group 2007 £'000 | |||
| Continuing operations | ||||
| (Loss)/profit for the year | (3,400) | 7,722 | ||
| Adjustments for: | ||||
| - | Taxation | (1,173) | 3,361 | |
| - | Finance credit | (65) | (214) | |
| - | Impairment of investments in subsidiaries | - | - | |
| - | Depreciation | 890 | 1,010 | |
| - | Amortisation of intangible assets | 16 | 23 | |
| - | Profit on sale of property, plant and equipment | (28) | - | |
| - | Loss on sale of intangible assets | 13 | - | |
| - | Foreign currency translation | 279 | 236 | |
| - | Increase in provision for other liabilities and charges | 1,861 | 295 | |
| - | Movement in available-for-sale financial asset | 19 | 9 | |
| - | Movement in share option charge | 98 | 121 | |
| - | Movement in retirement benefit obligation | (1,069) | (1,945) | |
| - | Increase in non-current other receivables | - | - | |
| Changes in working capital (excluding the effects exchange differences on consolidation): | ||||
| - | Increase in inventories | - | (4) | |
| - | Decrease/(increase) in trade and other receivables | 1,260 | (3,064) | |
| - | (Decrease)/increase in trade and other payables | (3,473) | (1,573) | |
| Cash (used in)/generated from continuing operations | (4,772) | 5,977 | ||
| Discontinued operations | ||||
| Loss for the year | (10,163) | (3,074) | ||
| Adjustments for: | ||||
| - | Taxation | 807 | (794) | |
| - | Finance cost | 1 | - | |
| - | Depreciation | 211 | 207 | |
| - | Amortisation and impairment of intangible assets | 33 | 1,333 | |
| - | Loss on sale of property, plant and equipment | - | 10 | |
| - | Fair value adjustment of Retail Software business assets | 8,328 | - | |
| - | Profit on sale of Retail Software business | (2,135) | - | |
| - | Foreign currency translation | (529) | (24) | |
| - | Movement in retirement benefit obligation | - | (11) | |
| Changes in working capital (excluding the effects exchange differences on consolidation): | ||||
| - | Increase in inventories | (145) | (68) | |
| - | (Increase)/decrease in trade and other receivables | (837) | 4,094 | |
| - | Increase in trade and other payables | 3,947 | 302 | |
| Cash (used in)/generated from discontinued operations | (482) | 1,975 | ||
| Cash (used in)/generated from operations | (5,254) | 7,952 | ||
11. RECONCILIATION OF MOVEMENT IN NET FUNDS
| As at 1 January 2008 £'000 | Cash flow £'000 | Non-cash movement £'000 | As at 31 December 2008 £'000 | |
| Cash in hand and at bank | 10,593 | (8,674) | 409 | 2,328 |
| Invoice discounting | - | (700) | - | (700) |
| Debt due after one year | (1,275) | 1,275 | - | - |
| Debt due within one year | (460) | 460 | - | - |
| Finance leases due within one year | (8) | 2 | - | (6) |
| 8,850 | (7,637) | 409 | 1,622 |
Financial information
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 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 237(2) or (3) of the Companies Act 1985.
Key dates
The Annual Report and Financial Statements are scheduled to be posted to shareholders in early May. The Annual General Meeting of the Company is scheduled to take place at 10am on Wednesday 17 June 2008 at 39 Victoria Street, London, SW1H 0EU.
Group Companies
Professional Business Services
Christie + Co
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, Finland, France, Germany and Spain.
www.christie.comwww.christiecorporate.com
Christie Finance
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
Christie Insurance
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
Stock & Inventory Systems & Services
Orridge
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
Venners
The leading supplier of stocktaking, inventory, control audit and related stock management services to the hospitality sector. Bespoke software and systems enable real time management reporting to its customer base using the most up-to-date technology.
www.venners.com
Vennersys
Vennersys provides software and systems to the leisure and hospitality sectors. It operates in the UK and North America and includes cinemas and visitor attractions among its clients.
www.vennersys.com