Christie Regulatory News (CTG)

12 September 2011

Christie Group plcInterim Results for the six months ended 30 June 2011

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 Interim Results for the six months ended 30 June 2011.

Key points:

98% increase in first half profit before tax to £0.6m

73% improvement in first half operating profit from 2010 to £0.6m

8% growth in first half revenue from 2010 to £27.3m

Significant mandates secured throughout H1 for agency and valuation work 18% increase in SISS division revenue for the period

European stocktaking income for the period increased by 91% from first half of 2010

10% increase in H1 staff numbers year-on-year

Continuing investment in resources to position business for future growth

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

"Christie Group has continued to demonstrate its resilience with an improved first half operating profit achieved in a difficult market. Our specialist skills and our in-depth knowledge of our sectors makes us uniquely placed to provide our clients with the best outcomes and service levels. We look to benefit from the opportunities that continue to arise."

Enquiries:

David Rugg 020 7227 0707Chief ExecutiveChristie Group plc

Russell Cook / Carl Holmes 020 7149 6000Charles Stanley SecuritiesNominated Adviser

Tom Cooper 0797 122 1972Winningtons tom.cooper@winningtons.co.uk

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 on-line 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

Turnover for the period to 30 June 2011 increased by 8% year-on-year to £27.3m (2010: £25.2m), generating an improved first-half operating profit of £0.6m (2010: £0.3m). This result follows my address at the Annual General Meeting in June, where I referred to the effect of external factors in slowing our activity at the beginning of the year. I am pleased to be able to report a far stronger second quarter, which has more than compensated and allows us to enter the second half of 2011 with optimism. We can reflect on a first half that was both challenging and rewarding in equal measure but which most importantly demonstrates the ongoing resilience of our businesses in markets where such strength does not appear to have been commonplace.

These results represent a continued profitable performance from the Group since recovering from the lows of the recession, which is particularly pleasing given that we have continued to invest in the business despite the broader economic challenges. Our continued commitment to staff retention, recruitment, capital expenditure and the acquisition costs of winning new clients is core to maintaining our position in the marketplace.

The resources needed to drive growth in both Professional Business Services and Stock & Inventory Systems & Services in our European markets, and the growth in our UK stocktaking business, have contributed to an increased working capital funding requirement. At the same time our capital expenditure has almost doubled in comparison to the same period last year, as we have taken the opportunity to ensure that our clients continue to benefit from the efficiencies and service quality that state-of-the-art technology affords.

Professional Business Services Division

Revenue for the division was £13.4m (2010: £13.5m) resulting in an operating loss of £0.3m (2010: £0.5m profit). As part of our continued investment strategy, our decision to strengthen resources within the division from the low levels reached at the height of the cost-cutting in 2008 and 2009 has been the principal contributor to the losses incurred in this period. Increased operating costs of £13.7m (2010: £12.9m) serve to demonstrate the steps we have taken in order to ensure we have the platform in place to take advantage of steadily increasing pipelines. 

Christie + Co has secured significant mandates in both agency and valuation work in the period. These include instructions to sell 84 Oddbins stores and the high profile von Essen country house hotel chain. In the pub and restaurant sectors, mandates have been successfully completed which involved the sale of 11 Cougar Leisure units, and Moorfields Corporate Recovery, for whom the former Moorgate Taverns estate was sold. At the beginning of the year, Christie + Co secured a major instruction to sell 126 units from the Retail & Licensed Properties' estate on behalf of Administrators and has already made considerable progress on this project, with deals agreed on around 50 units. Christie + Co have been instructed by Southern Cross to sell their residual freehold care homes, while an acquisition project for The Restaurant Group has successfully identified new sites for Brunning & Price. These are just a few highlights of a period which has witnessed a return to price stability and a willingness by investors to engage. Private equity clients have started to request assistance in identifying opportunities for re-entering the market or making strategic acquisitions to grow their existing holdings which illustrates further interest.

Strong partnerships have been forged with the banks as they seek to understand the underlying operational performance of the businesses within our sectors rather than just their valuation in isolation. This, coupled with a strong stream of work from bank support and recovery, has seen the pipeline of work stabilise.

Christie Finance, our finance brokerage business, has experienced the return of some traditional lines of funding through the mainstream banks. Given that for many the traditional sources of funding remain blocked, this is by no means a return to the lending of old but it is an encouraging sign. We have secured a number of facilities in the pub, hotel and retail sectors with European Investment Bank support demonstrating a breadth of funding sources and mechanisms to complete deals.

Christie Insurance continues to see hardening insurance premiums. The recently established Ipswich office is trading well. Notably the business has recently won Brooks Hotels, a hotel group with 21 historic sites around the UK.

Stock & Inventory Systems & Services Division

Revenue growth for the division was significant for the period with an 18% increase in turnover to £13.9m (2010: £11.7m). In reporting the resultant operating profit of £0.9m (2010: £0.04m), the division is starting to demonstrate the return on its investment in technology, recruitment and training. This is particularly the case in Europe where the decision to expand into the continental market has now been fully vindicated. Turnover in Europe has nearly doubled year-on-year with continued growth and strong demand still in evidence. Our sales pipelines continue to build in both our licensed trade stocktaking and retail stocktaking businesses, as clients recognise the value of effective stock control and insightful management reporting.

New clients won in this period include Marks & Spencer, Swarovski, Zara, Best Buy, All Saints, Hobbycraft and Inditex Paris (with 40 stores). Our expertise in the supply chain and our ability to translate this through a technological advantage in designing bespoke systems for clients where competitors have failed to identify, anticipate and highlight problem areas is proving vital in winning new business. Our UK retail stocktaking operation has won many clients through addressing fraud which is prevalent in hard times. The uniqueness of this business is the ability to quickly demonstrate tangible returns for clients in efficiency cost savings, margin protection and fraud prevention.

Our licensed trade specialists have seen a greater appreciation for the quality of our reporting in protecting margins. New clients include Park Resorts, Cairn Hotels, Murrayfield Stadium and Hall & Woodhouse. A noticeable increase in the numbers of man days used, compared to the corresponding period in 2010, indicate a return of client engagement due to a return of confidence across the sector and a greater appreciation of the value our services can bring.

Our visitor attractions business has launched a new CRM product for managing customers, memberships and direct marketing. This is in addition to the VENPoS admissions system and online ticketing products which have added new clients including Kidzworld in Cornwall and Merlin Entertainments.

Outlook

Christie Group is well-positioned in its markets and - we believe - executing the correct strategy in a difficult market. Visibility continues to be opaque and therefore predicting the path of recovery is not easy. We have the reference point of decades of market data which enables us to chart the pattern of this downturn relative to previous fluctuations in the market, notably the recession in the early 1990s. Whilst the background to this recession and its drivers remain somewhat different to that experienced twenty years ago, the trends we are seeing are remarkably similar.

The complementary nature of our divisions remains key to our trading resilience. We can see the benefits of the cross-selling opportunities in the results and believe that client relationships will continue to be won and strengthened through our ability to partner with clients through the lifecycle of their businesses. Our depth of understanding of our sectors within the context of the broader markets and our ability to share best practice is what provides the added value to our clients. Allied to this we are able to differentiate our offering by the use of technology, enabling efficiency and profitability for our clients through the provision of accurate and timely management information. In difficult times this insight is more acutely appreciated.

When we reinstated a dividend earlier this year we set out our intention to review the dividend position at the end of the financial year, and we see no reason to divert from this strategy. We remain confident despite the continuing uncertain climate, knowing that we have a strong, resilient business with an enviable market reputation and an experienced staff. Whilst there are many factors out of our control we feel that the steps we have taken to date have been timely and judicious and we continue to invest for the future. 

We record the death of Charles Wilson at the age of 94. Charles was our senior Non-executive Director, serving on the Board from 1980 to 2000. He was a marvellous source of inspiration to us all.

Philip Gwyn

Chairman

Consolidated interim statement of comprehensive income

Profit for the period after tax attributable to:

 Earnings per share - pence

All results stated above are attributable to continuing operations.

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 9 September 2011.

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 2011.

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2010. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.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 2011 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 2010 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 6 months ended 30 June 2011 and 30 June 2010 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 2010.

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 the period ended 30 June 2011 are as follows:

The reportable segment results for the period ended 30 June 2010 are as follows:

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

The Group is not reliant on any key customers.

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

The reportable segment assets at 30 June 2011 for the period then ended are as follows:

The reportable segment assets at 30 June 2010 for the period then ended are as follows:

The reportable segment assets at 31 December 2010 for the year then ended are as follows:

5. Taxation

The tax charge for the six months ended 30 June 2011 is based on an underlying tax rate (current year corporation

and deferred tax as a percentage of pre tax profits) of 26% which includes the movement in the deferred tax asset relating to retirement benefit obligations. The tax charge of £251,000 is comprised of £124,000 being a reduction in the deferred tax asset through the effective taxation of current year profits (i.e the deferred tax charge arising on the current period's taxable profits) and a further £127,000 arising from the reduction in the value of the brought forward deferred tax asset as a result of the decrease in the enacted tax rate from 27% to 26% at the statement of financial position date.

The tax charge for the six months ended 30 June 2010 was based on an underlying tax rate of 28% which included the movement in the deferred tax asset relating to retirement benefit obligations.

6. 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 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.

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

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 2011 advances by the Group to the ESOP to finance the purchase of ordinary shares were £1,988,000 (30 June 2010: £1,582,000; 31 December 2010: £1,988,000). The market value at 30 June 2011 of the ordinary shares held in the ESOP was £359,000 (30 June 2010: £205,000; 31 December 2010: £323,000). The investment in own shares represents 733,000 shares (30 June 2010: 533,000; 31 December 2010: 582,000) with a nominal value of 2p each.

8. 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 to 31 December 2010 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 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 2010.9. Note to the cash flow statement

Cash used in operations

10. Cash and cash equivalentsCash and cash equivalents and bank overdrafts include the following for the purposes of the cashflow statement:

11. Acquisition

On 7 March 2011, Christie & Co (Holdings) Limited, a wholly owned subsidiary of Christie Group plc, acquired a 90% shareholding in the ordinary shares of Christie & Co FZ-LLC, a newly incorporated company registered with The Dubai Technology and Media Free Zone Authority, for a consideration of 54,000 AED.

12. Related-party transactions

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

There were no related party transactions during the period.

13. Publication of Interim Report

The 2011 Interim Accounts are available on the Company's website www.christiegroup.com