Christie Regulatory News (CTG)

10 September 2012

Christie Group plcInterim Results for the six months ended 30 June 2012Christie Group demonstrates improved performance and a capacity for further growth

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 2012.Key points: 11% growth in first half revenue to £30.2m (2011: £27.3m) 67% increase in first half operating profit to £1.0m (2011: £0.6m) 68% increase in first half profit before tax to £0.9m (2011: £0.6m)

98% increase in earnings per share to 2.57p per share (2011: 1.30p) Acquisition of Orridge Business Sales creates the UK's largest pharmacy agency 20% growth in PBS revenue drives £0.9m improvement in first half operating profit for the division Continued growth in SISS revenues to £14.2m (2011: £13.9m)

Interim dividend reintroduced at 0.5p per shareCommenting on the results, David Rugg, Chief Executive of Christie Group, said:"Christie Group has delivered a very encouraging first half result which is testament to our ability to provide our clients with a first-class quality of service based upon our in-depth specialist knowledge of our sectors. We continue to strengthen our leading position across our markets."

Enquiries:David Rugg 020 7227 0707Chief ExecutiveChristie Group plcRussell Cook / Carl Holmes 020 7149 6000Charles Stanley SecuritiesNominated AdvisorTom Cooper / Paul Vann 020 3176 4722Winningtons 079 7122 1972 tom.cooper@winningtons.co.uk

Notes to Editors:Christie Group plc (CTG.L.), quoted on AIM, is a leading professional business services group with 39 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 STATEMENTI am pleased to report Interim Results which reflect the good start to the year referred to in my AGM statement and which shows growth over the comparable period in 2011. Revenue for the period was £30.2m (2011: £27.3m) representing an increase of 11%, with operating profit of £1.0m (2011: £0.6m) up 67%.The Group companies are trading well in markets which have, if anything, shown some signs of diminished competition.The Christie Group boasts within its collection of subsidiary businesses the largest transaction and advisory teams in Europe in the specialist fields of hotels, pubs, healthcare, nursery and pharmacy. This is a considerable accolade and a vindication of our growth strategy that we find ourselves in such a strong position while others have either contracted or exited our markets.Professional Business Services Division (PBS)Revenue for the PBS division was £16.0m (2011: £13.4m), producing an operating profit of £0.5m (2011: £0.3m operating loss).As banks move to unwind many of their distressed debt portfolios resulting from overextended loans or ailing businesses, either independently or through the sale of debt books to wholesale debt traders, the resulting advisory and valuation assignments won by the PBS division have accounted for much of the activity in the period. We are confident that these consultancy services will, in turn, lead to requirements for our transactional expertise as lenders identify their disposal targets and continue to release their assets to the market.During the period we have advised Terra Firma on its acquisition of Four Seasons Healthcare, been instructed by Travelodge to market forty eight former Little Chef sites and received instructions from NHP and Priory to name but a few. In the hotel and leisure sectors, notable achievements include the sale of one of the UK's premier golf driving ranges, the World of Golf in New Malden, Surrey, and the sale of St Olave's at One Tower Bridge, a Grade II Listed former grammar school, to India's leading hotel company, Bharat Hotels, for conversion into a 70 room and suite development. Activity levels are strong with a healthy spread across industry sectors and regions.Internationally, Christie + Co has boosted the Berlin team and sold the Hotel Lancaster in Paris, a 5-star boutique hotel with an asking price of €60m, on behalf of a Spanish client. This demonstrates our increasingly international client base and our ability to service our clients' cross border disposal and acquisition strategies.Our acquisition and successful integration of Orridge Business Sales (OBS) creates the UK's largest pharmacy agency. OBS is increasingly working with sister companies in the Group to market specialised products which increase the cross selling of Group products to a wider customer base.Christie Finance and Christie Insurance are employing their knowledge of our client base to design sector specialist products and innovative services to achieve greater market share. This informed business development has resulted in a 27% increase in completed deals for Christie Finance through the use of unique access to funding lines for specialist sectors, whilst Christie Insurance will shortly be launching a bespoke product for the pharmacy market.We have seen new entrants into the banking market for lending to the SME sector, with some evidence of the Government's incentives to lend manifesting themselves in the products on offer.

Pinders, our valuation division, is benefiting from its field-based surveyor model which delivers a consistent country-wide service from a predominantly senior team of surveyors. The broadening of services offered by Pinders to include Building Services and Project Consultancy has led to revenue growth and significant cross-selling opportunities for these aligned skills.Stock & Inventory Systems & Services Division (SISS)Revenue for the division grew 2% on the first half of 2011 to £14.2m (2011: £13.9m), resulting in an operating profit of £0.5m (2011: £0.9m).Our SISS division contains two of the UK's leading and most readily recognised brands in the licensed trade, retail and pharmacy markets for stocktaking and stock audit services. In 2011, Venners completed over 24,000 jobs in the licensed trade while Orridge undertook over 33,000 retail stock assignments.We entered the year having won a significant amount of new business in H2 2011. This new business carries a lead time in respect of staff training and cash flow demands in achieving profitability. Whilst this is part and parcel of the industry and a short-term challenge, it also acts as a significant barrier to entry for our competitors.The dynamics of today's retail, leisure and hospitality industries benefit operators who are able to tender for larger contracts and who are able to spread the cost of greater investment in technology and rigorous staff training across a scale operation. Christie Group is one such operator and our sustained investment has resulted in leading client service and superior management information for Orridge and Venners' clients, which have been rewarded with long-term contracts for the Group with a predominantly blue chip client base.This enviable market repute has helped secure a significant contract to deliver Event Profit Control and Stocktaking services to the majority of the Olympic Park outlets in addition to other Olympic venues. This is an endorsement of Venners' service quality and its ability to deliver services in scale.In addition, excellent service levels have seen Orridge increase its engagement with Poundland by 50%, extend its contract with Arcadia, secure Jack Wills and Jacques Vert as new clients in the UK, whilst also adding VF Europe to its international client base. Venners similarly has extended its client list adding, amongst others, the Youth Hostel Association and Weston Castle.The Group is looking at strategic options for expansion of its SISS operations in international territories where it is not already established. Many of these markets are served by a fragmented competition unable to offer international operators a consistent quality service both in scale and across multiple territories.

Vennersys, our visitor attraction solutions business, has continued its progress both in the UK and internationally.The SISS division has a strong sales pipeline and continues to invest in technology and staff training to exploit the expected opportunities in both product development and territorial expansion.OutlookA very good first half result reflects the comments I made in my statement to shareholders at our Annual General Meeting in June and gives us confidence in the prospects for the year. Our cost base is controlled and corresponds with our strategy of being market-ready and open for business across all our chosen areas of specialism.The business is well staffed and retains skill and capacity to meet market demand. Our staff retention ensures we have senior and experienced staff and a consistency of service quality, which is a key criterion for our customers.

We continue to attract business with household names who take comfort in our pedigree and long standing in the market. The quality of our services contributes directly to our clients' success, promoting a business relationship which becomes integral to their operation.Christie Group is well diversified and, after working capital funding requirements, debt free. Access to international markets, and more specifically European markets, presents significant opportunities for the Group where we are benefiting from an increased market reputation and a revival in activity levels.New briefs have continued to flow in throughout the summer and despite some disruption to normal trading patterns during the Olympics, we remain optimistic about the outcome for the year as a whole. We announce the reintroduction of an interim dividend of 0.5p per share.Philip GwynChairmanConsolidated interim statement of comprehensive income

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

Total comprehensive income / (losses) attributable to:

 Earnings per share - pence

Included within the results for the year ended 31 December 2011 are exceptional revenue and costs relating to the commencement of a new operation. The amounts included were revenue of £60,000 (period ended 30 June 2011: £6,000) and total operating expenses of £465,000 (period ended 30 June 2011: £168,000), resulting in an exceptional operating loss of £405,000 (period ended 30 June 2011: £162,000). There are no exceptional items within the results for the period ended 30 June 2012.

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 7 September 2012.

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 2012.

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2011. 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 2012 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 2011 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 2012 and 30 June 2011 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 2011.

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 2012 are as follows:

The reportable segment results for the period ended 30 June 2011 are as follows:

The reportable segment results for the year ended 31 December 2011 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 2012 are as follows:

The reportable segment assets at 30 June 2011 are as follows:

The reportable segment assets at 31 December 2011 are as follows:

5. Taxation

The tax charge for the period ended 30 June 2012 is based on an underlying tax rate (current year corporation and deferred tax as a percentage of pre tax profits) of 24% which includes the movement in the deferred tax asset relating to retirement benefit obligations. The tax charge of £322,000 comprises of £79,000 being a decrease 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 £243,000 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 26% to 24% at the statement of financial position date.

The tax charge for the period ended 30 June 2011 was based on an underlying tax rate of 26% 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 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.

7. Dividends

A final dividend in respect of the year ended 31 December 2011 of 0.5p per share, amounting to a total dividend of £126,000, was approved and paid to the Christie Group plc registrar during the period. The funds were transferred to shareholders on 2 July 2012.

An interim dividend in respect of 2012 of 0.5p per share, amounting to a dividend of £126,000, was declared by the directors at their meeting on 7 September 2012. These financial statements do not reflect this dividend payable.The dividend of 0.5p per share will be payable to shareholders on the record on 28 September 2012. The ex-dividend date will be 26 September 2012. The dividend will be paid on 19 October 2012.

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 2012 advances by the Group to the ESOP to finance the purchase of ordinary shares were £1,868,000 (30 June 2011: £1,988,000; 31 December 2011: £1,868,000). The market value at 30 June 2012 of the ordinary shares held in the ESOP was £16,000 (30 June 2011: £359,000; 31 December 2011: £302,000). The investment in own shares represents 22,000 shares (30 June 2011: 733,000; 31 December 2011: 483,000) with a nominal value of 2p each.

9. 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 2011 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 2011.

10. Note to the cash flow statement

Cash generated from / (used in) operations

11. Cash and cash equivalentsCash and cash equivalents include the following for the purposes of the cashflow statement:

12. Business combinations

a. Acquisition in 2012

On 30 April 2012, Christie Owen and Davies Limited, a wholly owned subsidiary of Christie Group plc, completed the acquisition of the entire issued share capital of Orridge Business Sales Limited, a company incorporated in England and Wales and trading in the United Kingdom and whose principal activities are agents in the sale of pharmaceutical businesses. As at 30 June 2012 no consideration had been paid pending finalisation of the completion accounts. The following table sets out details of the consideration to be paid in accordance with the share purchase agreement and the fair value of the assets and liabilities acquired.

The contingent consideration represents consideration payable which is equivalent to fifty per cent of all commissions received from business sales and fifty per cent of all income received from valuations in relation to instructions received by Orridge Business Sales Limited on or before 30 April 2012. The contingent consideration is to be satisfied in ordinary 2p shares of Christie Group plc, to be purchased for this purpose at arms length terms from the available issued share capital of the company, on the basis of the mid-market share price at the date of exchange (3 April 2012).

b. Acquisition in 2011

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.

13. Events after the end of the reporting period

On 3 July 2012, Christie & Co (Holdings) Limited acquired a further 5% shareholding, for nil consideration, in the ordinary shares of Christie & Co FZ-LLC, taking its shareholding at 3 July 2012 to 95%.

14. Related-party transactions

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

During the period the company was repaid a non-interest bearing short-term loan of £660,000 from 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.

During the period rentals of £150,000 (2011: £nil) were paid to Carmelite Property Limited by Christie Group plc in accordance with the terms of a long-term lease agreement.

15. Publication of Interim Report

The 2012 Interim Financial Statements are available on the Company's website www.christiegroup.com