Christie Regulatory News (CTG)

16 September 2014

Christie Group plcInterim Results for the six months ended 30 June 2014

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 announced its Interim Results for the six months ended 30 June 2014.

Key points:

· Revenue for the first half up 14.4% to £29.4m (2013: £25.7m)

· £1.1m increase in operating profit before exceptional items to £0.8m (2013: £0.3m loss)

· Basic earnings per share up 5p per share to 1.74p (2013: 3.26p negative eps)

· Interim dividend increased by 50% to 0.75p per share (2013: 0.5p per share)

· Corporate M&A instructions provide basis for expectation of a strong full year result

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

"Our first half performance and the activity we continue to see provides us with confidence that we will deliver a much improved result for the year as a whole, driven by a resurgent UK M&A market."

Enquiries:

Notes to Editors:

Christie Group plc, quoted on AIM, is a leading professional business services group with 43 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, Pinders, Christie Finance and Christie Insurance: 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

I am pleased to report a first-half operating profit before exceptional items of £0.8m (2013: £0.3m loss) which is in line with the positive outlook presented in my AGM statement in June. This £1.1m improvement in the H1 operating result before exceptional items follows a 14.4% increase in revenue to £29.4m (2013: £25.7m).

Professional Business Services

Our corporate Mergers & Acquisitions activity has been both intense and successful, with our UK operations leading the recovery in what has been an encouraging six months. The rewards of this activity have continued to accrue across the summer and, with our pipelines fully charged, we anticipate the delivery of a strong second-half result.

M&A activity has continued apace. Owners of companies trading in our sectors increasingly appreciate how a detailed knowledge of industry demands and focus coupled with the long term trust of the national, regional and local players allows us a "rifle shot" approach when desired to deliver both a quick and timely transaction at the best available terms.

First half instructions in the hotel sector included the recently completed sale of QMH Hotels for the owning consortium as well as LRG's disposal of 19 Holiday Inn hotels for a price significantly above the £70 million guide price. C+Co have also been instructed to market De Vere Group's Golf & Resort Hotels, with a value of over £160m.

Our consultants carried out advisory work on a number of non-performing loan portfolios, including a circa €4bn NPL portfolio in Spain which includes a significant number of hotels.

In the Care arena, we sold Caring Daycare Nurseries, a group of 12 children's day nurseries, to Busy Bees Ltd. We also acted for Mencap in the sale of 3 Educational Colleges to GI Partners' backed Cambian Group.

We have sold pubs to Wetherspoons since their inception and were pleased to add Browns Hotel in Tavistock to their portfolio. We were pleased to advise a mainstream fast food franchise in releasing equity - an illustration of our knowledge in the fast food sector.This is complemented by Venners Food Services Consultancy.

Our Pharmacy agency division was pleased to report the sale of 11 community pharmacies to AMG Healthcare, the major shareholder of which is buying group Avicenna plc.

Pinders' building division has been newly appointed to work on behalf of British Telecom. Building inspection reports were also prepared for Majestic Bingo on the Top Ten Bingo portfolio.

Christie Finance has established a specialist Medical Sector team to assist the funding of pharmacies, GPs' and dental surgeries and veterinary practices.

The regulation of consumer credit introductions has moved from the OFT to the FCA. Our belief is that a number of competitors will not choose to seek full authorisation, affording increased opportunity for those which remain.

The purpose of insurance is to meet losses. Christie Insurance were pleased to assist our client in being able to re-open the Cambridge Arms Hotel in the space of four days, following a fire.

Stock & Inventory Systems & Services

Three planned events have enabled us to continue to grow revenue in our Stock & Inventory Systems & Services division at the expense of a short term impact on operating profit. These moves will facilitate the further growth of the businesses concerned and allow us to safeguard continuing underlying profitability.

When we acquired our German based retail stocktaking business in September 2013, we knew that its revenues were heavily biased towards the second half of the year. This continues to be the case. Moving forward, we are pursuing further new work for H1 2015 to better balance our German trade.

We have just finished writing a new stocktaking system for our hospitality stocktaking business Venners, appropriately called Next Generation. We will introduce this to clients progressively through to April 2015. This system is designed to deliver real-time reporting and online access, delivery and consumption of data and margin and revenue analysis to our clients. We believe it is a marked improvement over our existing system and ahead of any commercially scaleable solution we know of.

In Vennersys we have finished an online merchandising system which operates as a stand-alone module of our new visitor attraction software encompassing online ticketing, event control, point of sale and customer relationship management.

Recent new clients included Carphone Warehouse, Swarovski in Belgium, Holland and Germany and Molton Brown, Harveys of Lewes, St. Austell Brewery and Novus Leisure.From October this year we will accommodate the knock-on effect of an increase in minimum wage.Whilst we await any legislation relating to zero hour contracts, it is noteworthy that our day rate staff each currently work approximately 96% of the hours of their full time equivalents.

Outlook

UK trading is set fair for our second half. We continue carefully to expand whilst our business continues to grow organically. The sectors we operate in are buoyant, too. We expect to report a strong outcome for the year with the potential for further improvement once the recovery in mainland Europe materialises.

On your behalf, I thank our management and staff for some truly excellent achievements.

The Board have declared an increased interim dividend of 0.75p per share (2013: 0.50p per share) which will be paid on 17 October 2014 to shareholders on the register on 26 September 2014.

Consolidated interim income statement

Profit / (loss) for the period after tax attributable to:

 Earnings per share - pence

* Exceptional costs for the half year to 30 June 2013 and year to 31 December 2013 relate to the restructuring of operations. There are no such costs in the half year to 30 June 2014.

Consolidated interim statement of comprehensive income

Total comprehensive (losses) / income attributable to:

Consolidated interim statement of changes in shareholders' equity

Consolidated interim statement of financial position

These consolidated interim financial statements have been approved for issue by the Board of Directors on 15 September 2014.

Consolidated interim statement of cash flows

Notes to the consolidated interim financial statements

1. General information

Christie Group plc is the parent undertaking of a group of companies covering a range of related activities. These fall into two divisions - Professional Business Services and Stock & Inventory Systems & Services. Professional Business Services principally covers business valuation, consultancy and agency, mortgage and insurance services, and business appraisal. Stock & Inventory Systems & Services covers stock audit and counting, compliance and food safety audits and inventory preparation and valuation, hospitality and cinema software.

2. Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC) and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 December 2014.

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2013, except for those noted below and except for the adoption of new standards and interpretations effective as of 1 January 2014. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

Several new standards and amendments apply for the first time in 2014. However, they do not materially impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group.

Non-statutory accounts

These consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. The financial information for the period ended 30 June 2014 set out in this interim report does not constitute the Group's statutory accounts for that period. The statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis. The financial information for the periods ended 30 June 2014 and 30 June 2013 is unaudited. 

3. 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.

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 consistent with those applied to the consolidated financial statements for the year ended 31 December 2013.

4. Segment information

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

The reportable segment results for continuing operations for the period ended 30 June 2014 are as follows:

The reportable segment results for continuing operations for the period ended 30 June 2013 are as follows:

The reportable segment results for continuing operations for the year ended 31 December 2013 are as follows:

The Group is not reliant on any key customers.

5. Taxation

During the period, 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 2014 which had been measured at 21% at 31 December 2013 have been re-measured using the enacted rate that will apply at 31 December 2014 (20%).

Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets where it is probable that these assets will be recovered.

The tax on the Group's profit / (loss) before tax differs from the theoretical amount that would arise using the standard rate of corporation tax in the UK of 21% due to £125,000 arising from the reduction in the value of the brought forward deferred tax asset and a further £15,000 arising from other movements in the deferred tax asset.

6. Discontinued operation

On 31 January 2013, Christie + Co FZ LLC, a 95% owned subsidiary of Christie Group plc, ceased trading following the Board's decision to voluntarily liquidate the operation. The operations of Christie + Co FZ LLC have been classified as a discontinued operation for the period ended 30 June 2013.

The results of Christie + Co FZ LLC are as follows:

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 period, 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 potential dilutive 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. Dividends

A final dividend in respect of the year ended 31 December 2013 of 1.0p per share, amounting to a total dividend of £262,000, was approved and paid to the Christie Group plc registrar on 27 June 2014. The funds were transferred to shareholders on 04 July 2014.

An interim dividend in respect of 2014 of 0.75p per share, amounting to a dividend of £199,000, was declared by the directors at their meeting on 10 September 2014. These financial statements do not reflect this dividend payable.

The dividend of 0.75p per share will be payable to shareholders on the record on 26 September 2014. The ex-dividend date will be 24 September 2014. The dividend will be paid on 17 October 2014.

The Company has one class of ordinary shares which carry no right to fixed income.

During 2013, the Company placed 1,263,178 new 2p Ordinary shares during the period. The shares were placed at 62p per share, raising a total of £784,000.

Investment in own shares

The Group has established an Employee Share Ownership Plan (ESOP) trust in order to meet its future contingent obligations under the Group's share option schemes. The ESOP purchases shares in the market for distribution at a later date in accordance with the terms of the Group's share option schemes. The rights to dividend on the shares held have been waived.

At 30 June 2014 advances by the Group to the ESOP to finance the purchase of ordinary shares during the period were £135,000 (30 June 2013: £nil; 31 December 2013: £39,000). The market value at 30 June 2014 of the ordinary shares held in the ESOP was £309,000 (30 June 2013: £57,000; 31 December 2013: £121,000). The investment in own shares represents 238,000 shares (30 June 2013: 91,000; 31 December 2013: 151,000) with a nominal value of 2p each.

10. Retirement benefit obligations

The Group operates two defined benefit schemes (closed to new members) providing pensions on final pensionable pay. The contributions are determined by qualified actuaries on the basis of triennial valuations using the projected unit method.

When a member retires, the pension and any spouse's pension is either secured by an annuity contract or paid from the managed fund. Assets of the schemes are reduced by the purchase price of any annuity purchase and the benefits no longer regarded as liabilities of the scheme.

The amounts recognised in the statement of comprehensive income and the movement in the liability recognised in the statement of financial position have been based on the forecast position for the year ended 31 December 2014 after adjusting for the actual contributions to be paid in the period.

The movement in the liability recognised in the statement of financial position is as follows:

The amounts recognised in the income statement and statement of comprehensive income are as follows:

The principal actuarial assumptions used were as follows:

Assumptions regarding future mortality experience were consistent with those disclosed in the financial statements for the year ended 31 December 2013.

11. Note to the cash flow statement

Cash (used in) / generated from operations

 12. Cash and cash equivalents include the following for the purposes of the cash flow statement:

13. Related-party transactions

There is no controlling interest in the Group's shares.

During the period rentals of £159,000 (30 June 2013: £155,000; 31 December 2013: £310,000) were paid to Carmelite Property Limited, a company incorporated in England and Wales, and jointly owned by The Christie Group Pension and Assurance Scheme, The Venners Retirement Benefit Fund and The Fitzroy Square Pension Fund, by Christie Group plc in accordance with the terms of a long-term lease agreement.

14. Publication of Interim Report

The 2014 Interim Financial Statements are available on the Company's website www.christiegroup.com