Final Results

RNS Number : 9818T

Christie Group PLC

04 April 2016

 

4 April 2016

Christie Group plc
Preliminary results for the 12 months ended 31 December 2015

Christie Group plc ('Christie Group' or the 'Group'), the leading provider of Professional Business Services and Stock & Inventory Systems & Services to the leisure, retail and care markets, is pleased to announce its preliminary results for the 12 months ended 31 December 2015.

Key points:

·      Revenue growth of 4.5% to £63.7m (2014: £61.0m)

·      Operating profit remained stable at £3.8m (2014: £3.7m)

·      Earnings per share increased to 9.73p per share (2014: 9.34p per share)

·      Proposed final dividend at 1.5p per share (2014: 1.5p per share) increasing the total dividend for the year to 2.50p per share (2014: 2.25p per share)

·      PBS division improves on 2014 result with 9% revenue growth and corporate activity across a broad selection of trade sectors

·      PBS operating profits up by 42% to £4.6m (2014: £3.3m)

·      Difficult year for UK retail stocktaking which adversely affected SISS division results

·      Christie + Co awarded 'UK's most active agent' in the Leisure and Hotels category by the Estates Gazette for the sixth year in succession

·      Christie Finance wins 'Commercial Mortgage Introducer of the Year' at the Business MoneyFacts Awards

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

"During 2015 we expanded our team, our network & our range of services and grew our client base.
  We have developed our systems for implementation in 2016 and are soundly based for the future."

 

Enquiries:

Christie Group plc
David Rugg Chief Executive	020 7227 0707
Daniel Prickett Chief Financial Officer	020 7227 0700
Panmure Gordon (UK) Limited Dominic Morley / Charles Leigh-Pemberton Nominated Adviser & Broker	020 7886 2906

Notes to Editors:

Christie Group plc (CTG.L), quoted on AIM, is a leading professional business services group with 46 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 an increased revenue of £63.7m (2014: £61.0m) and a marginally increased operating profit of £3.8m (2014: £3.7m).  A strong performance in our Professional Business Services division offset a very difficult year in retail stocktaking which I referred to at the time of the release of our interim results. Earnings per share increased by 4.2% to 9.73p per share (2014: 9.34p).

Professional Business Services

The PBS division improved further on the success it enjoyed in 2014, with a 9.1% growth in revenues to £36.3m (2014: £33.2m) producing an operating profit of £4.6m (2014: £3.3m).

Our transactional business in Christie & Co enjoyed a busy period of corporate activity across a broad selection of the trade sectors in which we operate.  Overall, we valued, advised on or transacted over £28bn of assets, instanced by brokering a deal worth more than £100m for Anchor to acquire 24 purpose-built homes operated by LNT Group subsidiary Ideal Carehomes, the sale of the MGallery in Vienna which showcased our Austrian and Spanish teams working together to introduce a Spanish buyer and maximising the price for our client, and Christie & Co identified Care UK to operate a new 80 bed care home in Sevenoaks  for developer Kitewood Group which the investor Octopus Healthcare has forward funded. For the sixth consecutive year, Christie & Co were voted the UK's most active hotel and leisure agent by the Estates Gazette.

Incentive fees rewarded us in a number of cases where proceeds realised exceeded expectations.  Our team, which is present in 31 locations across Europe and speaks 23 languages, has been able to offer industry leading advice and deal opportunities.   2015 also saw the Consultancy team produce one of the first industry reports into the impact of the National Living Wage (NLW) on the sectors that Christie & Co cover. 

Our two valuation practices advised on or valued over £20bn of assets for both balance sheet and security purposes in over 10,000 assignments, including valuing the Greene King and Marston Pub Estates. 

Our finance brokerage, Christie Finance, which was delighted to receive Full Authorisation from the FCA in November 2015, won Commercial Mortgage Introducer of the Year at the Business MoneyFacts Awards for the excellence of its service.

Christie Insurance has continued to deliver tailored solutions for clients not well served by standardised existing insurance arrangements, working closely with Christie & Co and Christie Finance in the process. One group of companies mainly focused in the elderly car sector gave us a very short timeframe to insure over 80 homes. We provided them with a single insurer and a saving in premiums of £100,000 compared to the next best option on the market.

Our Building Services division provided a range of support for clients during the year, from building monitoring for banks on multi-million pound developments, structural due diligence reports for a hotel chain in its disposal programme of selected assets, as well as interior design and project management to assist a client with its office refurbishment programme.

Stock & Inventory Systems & Services

Vennersys, our online visitor attraction and systems provider, saw the first migrations by existing clients to our new cloud-based model, VENPos Cloud. Avro Heritage Museum were among these early adopters.

Our first client installation of the new product took place in early January 2016, a milestone in the new product's development. We anticipate that in the case of 2016, required modules will be provided in our new system, enabling existing clients to be switched to the new software.  In addition, new clients are being won, including the award winning Folly Farm Adventure Park and Zoo.

Venners, our provider of stocktaking, inventory and consultancy services to the hospitality industry, has enjoyed another strong year of growth in both revenue and profitability.  We continue to recruit and train new operatives.  We have increased our regional management to enable more work to be sought and serviced on a local basis in addition to the national contracts we enjoy.  Our range of additional services has grown beyond stocktaking and inventory to now encompass compliance auditing, health and safety and consultancy.  Resulting from our advice, one multi-site operator added £2.8m to their gross profit in just nine months.

By contrast, the retail stocktaking sector in the UK is suffering the effect of rising wages at a time when certain areas such as food retailers are experiencing price deflation. The adverse impact on profitability has been marked and explains the operating losses reported in the division compared to the profitability seen in previous years. We anticipate continued disruption for Orridge whilst the National Living Wage is adopted.   Nonetheless, we continue to be offered assignments by new clients, albeit while being careful to accept new work on a profitable basis with all known future cost increases factored in.

In response to these challenges, we are working with our clients to apply stock control in the most cost-effective manner while developing additional services.  Our supply chain services are increasingly seen by retailers as part of the solution while we continue to enjoy a strong position in the profitable pharmacy stock taking arena from where Orridge first originated. We believe these UK markets continue to provide genuine opportunity once the period of disruption in the retail sector is overcome.

Looking outside the UK, Guess Europe has chosen Orridge as inventory partner on a European level because they provided a high professionalism, good technology to support the count and a great support on a human level during the whole inventory phase. It is a client experience that Orridge is well placed to repeat as a pan-European service provider.

Outlook
The year started quietly but has begun to gather pace with the Spring. Our pipeline of pending deals in progress continues to grow.  In late February we launched a new web portal under the christie.com address, with linked sites to Christie Finance and Christie Insurance.  I do encourage you to visit the site which is both intuitive and instant in bringing to market the trading businesses in which we specialise.

Whatever the outcome of the Brexit vote, the demand for our multi-domestic services will continue in both the UK and Europe.  We anticipate that our results in 2016 will be second half weighted but remain optimistic of our outcome for the year.

On your behalf, I am pleased to thank our staff who, between them, set the benchmark in our sectors for the services they provide.

Your directors recommend a final dividend of 1.5p per share (2014: 1.5p), a total of 2.50p for the year (2014: 2.25p) and an 11% increase on the prior year. If approved the dividend will be paid on 8 July 2016 to those shareholders on the register on 10 June 2016.

Philip Gwyn
Chairman

CHIEF EXECUTIVE'S REVIEW

It has been a year of stability and steady development. We have broadened and deepened our pattern of earnings.

Knowledge, passion, performance

The UK recovery continued into 2015 and Christie Group benefited from positive economic conditions.  We more than matched our strong performance from the previous year.

Critically, we also improved the quality of our earnings by generating more broadly based profits.  Aside from retail stocktaking (discussed below), there were solid contributions from right across the Group.

Our strategic positioning has always focused on the added value of in-depth, sector-specific expertise.  Increasingly, in today's knowledge economy, customers understand the importance of the high-quality advice we offer. They are prepared to pay a premium for that.

What brings them back is the quality of our service.  The commitment here is palpable.  We have built our business around our clients.  Our overriding imperative is to understand the issues clients face and address them with precisely tailored solutions.

A diversified structure

Christie Group provides services across the business life cycle.  We support prospective buyers taking on new businesses.  Our services assist company owners and operators in enhancing efficiency.  We provide expert support and services for those wanting to dispose of assets or sell their businesses outright.  The breadth of our operations keeps us connected with companies at every stage of their development.

We focus our energy and expertise on three broad economic sectors - retail, care and leisure.  This allows us to provide high value, high quality business intelligence to our customers. Our emphasis on quality makes it more difficult for competitors to undercut what we offer.

Our organisational structure combines the more predictable earnings from services that enhance day-to-day business operations with transaction-related services that may be more volatile.  Revenue is split between the two activities.

Sector knowledge

We play a pivotal role in our chosen sectors.

Our focus is on the entirety of each sector we cover, from smallest to largest, from the new entrant to the experienced operator.  It's ingrained in our culture.  We aim to meet the different client requirements that arise at different stages of the business cycle.  We understand the players, we understand the individual businesses and we understand what drives sector activity.

We maintain close connections with UK businesses within our specialist sectors that equip us with a strong sense of the dynamics underpinning economic performance.  We monitor around a quarter of a million small and medium-sized businesses in our specialist sectors.

The value of research

Business intelligence has always been at the foundation of our approach.

As business specialists we have an intimate understanding of what makes firms tick.  We can benchmark staffing costs, tariffs, margins - the whole business model - at a granular level.  We use this information to inform pricing and valuation and model risk factors in various businesses.

We are finding new ways to make the most of this very valuable information.

In June 2015, we drew on our expertise in Care to investigate nursing staff policy.  'The UK Nursing Workforce: Crisis or Opportunity' traced a direct link between reduced governmental support for nurse training places in the UK and the evolution of an expensive and risky 'agency culture' for health and social care staffing.  The report was referenced in a House of Lords debate.

The Consultancy team also produced one of the first industry reports on the impact of the National Living Wage (NLW) in 2015.  This looked in detail at the specific challenges for hotels, pubs, restaurants, care, retail, childcare and the medical sector.  The report suggested potential mitigating actions for affected businesses.

We have now set up a central research unit to share our in-depth understanding of specific sectors.

Professional Business Services

The PBS side of the business was responsible for the majority of our earnings this year.

Our strong 2014 results were largely based on hectic trading in the hotel sector.  Our ambition for 2015 was to achieve a more balanced revenue profile with all sectors contributing.  This was largely achieved.

Forced business sales triggered by banks have tapered off in the past two years.   Our second goal was to replace these with more owner-initiated transactions.  This we have also achieved.  What is more, we have managed to keep overall sales volumes broadly in line with the previous year.

These were notable achievements, especially given the fact that improved economic activity has not translated into additional sales volumes.  Volumes remain stubbornly low - at less than half their peak levels in 2007.

There is no shortage of demand.  The problem is lack of supply.  The resulting pent-up demand is pushing up valuations. Most of our sectors saw more than 9 percent rise in average prices across the year.  Care was the exception, with NLW concerns dampening demand, but even here market values rose. Encouragingly, we have seen a rise in recent weeks in the level of instructions received, which may be a sign that this shortage of supply is beginning to ease.

Business. Built around you.

Christie & Co celebrated its 80th anniversary year with a strong performance in 2015.  The company has a proud history of successful innovation.  It was the first agency to advertise on commercial television, the first to provide video guides to available businesses and the first to connect prospective business buyers with potential properties online.  It recently rolled out a new highly functional online sales portal christie.com with the potential to become the UK's destination site for business property sales.

Christie & Co also commissioned a rebranding exercise in 2015.  This underlined its reputation for in-depth, sector expertise.  Based around the concept of 'Business.  Built around you', the new branding reflects the ethos that has been core to the business ever since its inception in 1935.

The finance and insurance businesses incorporate the new Christie brand, reinforcing the complementary nature of the Christie offering.  Both businesses are valuable profit centres in their own right.  They also extend Christie's client relationships.  Christie Insurance maintained steady profitability throughout 2015, while Christie Finance continued to grow its fee income.

International

International investors intensified their European activity in 2015.  Christie provides joined-up advice through its network of European offices.  It is now present in 31 locations across Europe and is continuing to invest. It opened a Stockholm branch during the year and has set up a dedicated Asia desk aimed mainly at Chinese businesses looking to invest in Europe.

Market insight

In-depth expertise and service excellence are the common threads that link all our companies.

The nature of business buyers has changed.  They are often private equity or venture capitalists.  They have financial rather than operational pedigrees.  They therefore value our trade sector and operating expertise and this is driving demand for a wider package of services.  Our consultancy teams advise on health and safety, compliance issues and act in a troubleshooting capacity.

Pinders, our business valuation and appraisal company, continues to grow in scale.  It is also often used in a consulting capacity.  Its specialist reports are highly rated.  Banks often commission on new-build developments to advise both on the cost of the building project and the value of the resulting business.  It is one of a very few valuation specialists with the breadth of knowledge to deliver this service effectively.

Stock & Inventory Systems & Services 

Venners, our licensed trade and hospitality stocktaking business performed well during the year.  Ancillary services, such as compliance, health and safety, food consultancy and profit control continue to go from strength to strength.  The business focus now is to combine these in a strong consultancy option.

The Venners philosophy is to work closely with each client to optimise its business performance.  It enjoyed a significant increase in mandates in 2015; many of them were from existing clients.  The fact that its own success is being built on its clients' successes is testament to the effectiveness of this strategy.

Vennersys, our software business, is on track to achieve its goal of developing a cloud-based enterprise suite to sell to new and existing customers by mid 2016.  Cloud-based delivery will allow Vennersys to support a larger user base and transition to a more predictable, subscription-based revenue model.

Structural change in retail

This was a challenging year for Orridge, our retail stocktaking business.

The internet is bringing fundamental structural change to the retail sector.  Many physical retailers are transitioning to a click and collect model and this is stimulating growth in Orridge's supply chain division.

In the long-term this presents clear opportunities. Cohesive, well-ordered supply chains are critical for bricks and clicks retailers.  They need to know about availability and replenishment in real time.  Supply chain stock checking is continuous rather than periodic and can be co-located at numerous warehouse and distribution locations.  Since our stock checkers operate from a single location for the working week, the client benefits from an established and ongoing relationship, the benefits of which increase as knowledge of their supply operation is gained.

Whilst using our renowned technology, this is a people intensive service.  We rely heavily on people in the field to undertake our counts.  There have been 3 percent increases in the minimum wage for two years in a row and 2015 also saw the start of auto-enrolment for pensions.  These have led to higher staffing costs.

Our retail customers were already under margin pressure.  Some have been more willing to buy a wider range of services.  The problems principally relate to a handful of low margin contracts which will not be renewed on current terms.

Our focus now is on reorganising the business to reduce our central costs, and to find technological solutions that can improve operational efficiency.  We are in the process of rebuilding a solid foundation to ensure that this evolves into a profitable business in 2017 and beyond.

Bench strength

Staffing became a lot more stable in 2015 and we are finding it easier to recruit high calibre people.   Today's digital natives are adept at accessing multiple sources of information to acquire salient details.  These are precisely the kinds of skills Christie people use every day.

We now have better training in place.  A strong online element in several of our businesses allows people to develop skills at their own pace.  As a result, we are integrating and training our people a lot quicker. 

Our new regional structure has also paid dividends.  Our coherent, light-touch management structure retains control but encourages responsibility and self-reliance right across the business.  There is considerable depth in our teams and we have been able to take on some very large projects with extremely tight deadlines.

Looking ahead

Uncertainty is a dominant market theme in 2016.  Governments, businesses and investors are counselling caution.  At Christie Group, as we look beyond the immediate, we are quietly confident. As a highly diversified business founded on knowledge, service and operational excellence we shall continue to meet customer priorities and build on our strengths in our chosen sectors.

David Rugg
Chief Executive

Consolidated Income Statement
For the year ended 31 December 2015

	Note	2015 Total £'000	2014 Total £'000
Revenue		63,743	61,011
Employee benefit expenses		(42,888)	(40,274)
		20,855	20,737
Depreciation and amortisation		(576)	(458)
Impairment credit / (charge)		143	(56)
Other operating expenses		(16,659)	(16,517)
Operating profit		3,763	3,706
Finance costs	4	(91)	(125)
Finance income	4	-	9
Pension scheme finance costs	4	(511)	(231)
Total finance costs	4	(602)	(347)
Profit before tax		3,161	3,359
Taxation	5	(614)	(1,142)
Profit for the year after tax		2,547	2,217
Profit/(loss) for the period after tax attributable to:
Equity shareholders of the parent		2,712	2,455
Non-Controlling interest		(165)	(238)
		2,547	2,217
Earnings per share attributable to equity holders - pence
Profit attributable to the equity holders of the Company
-Basic	7	9.73	9.34
-Fully diluted	7	9.47	8.99

All amounts derive from continuing activities.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

				2015       Total       £'000		2014   Total   £'000
Profit for the period after tax				2,547		2,217
Other comprehensive income/(losses):
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations				(72)		41
Net other comprehensive (losses)/income to be reclassified to profit or loss in subsequent periods				(72)		41
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains / (losses) on defined benefit plans				1,676		(9,726)
Income tax effect				(335)		1,862
Net other comprehensive income/(losses) not being reclassified to profit or loss in subsequent periods				1,341		(7,864)
Other comprehensive income/(losses) for the period, net of tax				1,269		(7,823)
Total comprehensive income/(losses) for the period				3,816		(5,606)

Total comprehensive income/(losses) attributable to:

Equity shareholders of the parent		3,981	(5,368)
Non-Controlling interest		(165)	(238)
		3,816	(5,606)

Consolidated Statement of Changes in Shareholders' Equity

As at 31 December 2015

Attributable to the Equity Holders of the Company
	Share          capital        £'000	Fair value and other reserves        £'000	Cumulative    translation         reserve £'000	Retained earnings          £'000	Non - Controlling interest £'000	Total equity £'000
Balance at 1 January 2014	531	5,526	503	(6,600)	(51)	(91)
Profit/(loss) for the year after tax	-	-	-	2,455	(238)	2,217
Items that will not be reclassified subsequently to profit or loss	-	-	-	(7,864)	-	(7,864)
Items that may be reclassified subsequently to profit or loss	-	-	41	-	-	41
Total comprehensive income/(losses) for the period	-	-	41	(5,409)	(238)	(5,606)
Movement in respect of employee share scheme	-	(664)	-	(5)	-	(669)
Employee share option scheme:
-value of services provided	-	92	-	-	-	92
Dividends paid	-	-	-	(459)	-	(459)
Balance at 31 December 2014	531	4,954	544	(12,473)	(289)	(6,733)
Balance at 1 January 2015	531	4,954	544	(12,473)	(289)	(6,733)
Profit/(loss) for the year after tax	-	-	-	2,712	(165)	2,547
Items that will not be reclassified subsequently to profit or loss	-	-	-	1,341	-	1,341
Items that may be reclassified subsequently to profit or loss	-	-	(72)	-	-	(72)
Total comprehensive (losses)/income for the period	-	-	(72)	4,053	(165)	3,816
Movement in respect of employee share scheme	-	69	-	-	-	69
Employee share option scheme:
-value of services provided	-	184	-	-	-	184
Dividends paid	-	-	-	(653)	-	(653)
Balance at 31 December 2015	531	5,207	472	(9,073)	(454)	(3,317)

Consolidated Statement of Financial Position

At 31 December 2015

			2015 £'000	2014 £'000
Assets
Non-current assets
Intangible assets - Goodwill			1,703	1,740
Intangible assets - Other			1,066	697
Property, plant and equipment			1,095	893
Deferred tax assets			3,266	3,817
Available-for-sale financial assets			635	635
Other receivables			451	465
			8,216	8,247
Current assets
Inventories			6	2
Trade and other receivables			12,007	11,089
Current tax assets			45	12
Cash and cash equivalents			3,621	3,770
			15,679	14,873
Total assets			23,895	23,120
Equity
Share capital			531	531
Fair value and other reserves			5,207	4,954
Cumulative translation reserve			472	544
Retained earnings			(9,073)	(12,473)
			(2,863)	(6,444)
Non-Controlling interest			(454)	(289)
Total equity			(3,317)	(6,733)
Liabilities
Non-current liabilities
Retirement benefit obligations			11,958	13,970
Borrowings			7	-
Provisions			155	258
			12,120	14,228
Current liabilities
Trade and other payables			9,052	8,804
Current tax liabilities			-	403
Borrowings			4,288	4,385
Provisions			1,752	2,033
			15,092	15,625
Total liabilities			27,212	29,853
Total equity and liabilities			23,895	23,120

Consolidated Statement of Cash Flows

For the year ended 31 December 2015

	Note	2015 £'000	2014 £'000
Cash flow from operating activities
Cash generated from operations	8	2,681	3,188
Interest paid		(91)	(125)
Tax (paid)/received		(831)	147
Net cash generated from/(used in) operating activities		1,759	3,210
Cash flow from investing activities
Purchase of property, plant and equipment (PPE)		(571)	(223)
Proceeds from sale of PPE		21	12
Intangible asset expenditure - software		(574)	(266)
Investment in available-for-sale asset		-	(150)
Interest received		-	9
Net cash used in investing activities		(1,124)	(618)
Cash flow from financing activities
Proceeds from invoice finance		56	15
Payment of finance lease liabilities		(10)	-
Dividends paid		(653)	(459)
Net cash used in financing activities		(607)	(444)
Net increase in cash		28	2,148
Cash and cash equivalents at beginning of year		6	(2,130)
Exchange losses on euro bank accounts		(17)	(12)
Cash and cash equivalents at end of year	9	17	6

Notes to the Preliminary Announcement

1. BASIS OF PREPARATION

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in April 2016.

The accounting policies adopted are consistent with those applied in the 2014 financial statements.

New and amended standards adopted by the Group

Several new standards and amendments apply for the first time in 2015. However, they do not materially impact the annual consolidated financial statements of the Group.

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

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group or Company's accounting periods beginning after 1 January 2016 or later periods and have not been early adopted. It is anticipated that none of these new standards, amendments and interpretations currently in issue at the time of preparing the financial statements will have a material effect on the consolidated financial statements of the Group, except for IFRS 16 Leases' which becomes mandatory for the Group's 2019 consolidated financial statements.

IFRS 16, 'Leases' was issued in January 2016. The impact on the Group will be as follows: it eliminates the classification of leases as either operating leases or finance leases for a lessee. Instead all leases are treated in a similar way to finance leases. Leases will be 'capitalised' by recognising the present value of the lease payments and showing them either as lease assets (right-of-use assets) or together with property, plant and equipment. Where lease payments are made over time, the Group will also recognise a financial liability representing its obligation to make future lease payments. The most significant effect of the new requirements in IFRS 16 will be an increase in lease assets and financial liabilities. The Group does not plan to adopt this standard early and the extent of the impact will be assessed when the standard becomes effective.

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

2.1 Critical accounting estimates and assumptions

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

(a) Estimated impairment of goodwill

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

(b)  Retirement benefit obligations

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

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

-      the discount rate; 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 recognises all actuarial gains and losses immediately in other comprehensive income.

(c) Deferred taxation

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

3. SEGMENT INFORMATION

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

The segment results for the year ended 31 December 2015 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems & Services £'000	Other £'000	Group £'000
Total gross segment sales	36,369	27,478	4,312	68,159
Inter-segment sales	(104)	-	(4,312)	(4,416)
Revenue	36,265	27,478	-	63,743
Operating profit	4,646	(953)	70	3,763
Finance costs	(353)	(179)	(70)	(602)
Profit before tax				3,161
Taxation				(614)
Profit for the year after tax				2,547

The segment results for the year ended 31 December 2014 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems & Services £'000	Other* £'000	Group £'000
Total gross segment sales	33,343	27,772	4,074	65,189
Inter-segment sales	(104)	-	(4,074)	(4,178)
Revenue	33,239	27,772	-	61,011
Operating profit	3,276	202	228	3,706
Net finance (costs)/credit	(306)	(96)	55	(347)
Profit before tax				3,359
Taxation				(1,142)
Profit for the year after tax				2,217

*Restated to include all management charges.

Other segment items included in the income statements for continuing operations for the years ended 31 December 2015 and 2014 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
31 December 2015
Depreciation and amortisation	239	326	11	576
Impairment of trade receivables	(192)	49	-	(143)
31 December 2014
Depreciation and amortisation	177	278	3	458
Impairment of trade receivables	(23)	79	-	56

The segment assets and liabilities at 31 December 2015 and capital expenditure for the year then ended are as follows:

	Professional Business Services £'000	Stock & Inventory Systems & Services £'000	Other £'000	Group £'000
Assets	10,147	7,069	3,368	20,584
Deferred tax assets				3,266
Current tax assets				45
				23,895
Liabilities	14,189	7,024	1,704	22,917
Borrowings				4,295
Current tax liabilities				-
				27,212
Capital expenditure	270	441	454	1,165

The segment assets and liabilities at 31 December 2014 and capital expenditure for the year are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
Assets	10,133	6,291	2,867	19,291
Deferred tax assets				3,817
Current tax assets				12
				23,120
Liabilities	15,250	6,747	3,067	25,065
Borrowings				4,385
Current tax liabilities				403
				29,853
Capital expenditure	248	234	7	489

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

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

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

The Group manages its operating segments on a global basis.  The UK is the home country of the parent. The Group's revenue is mainly generated in Europe.

Revenue for continuing operations is allocated below based on the entity's country of domicile.

	2015 £'000		2014 £'000
Revenue
Europe	63,444		60,597
Rest of the World	299		414
	63,743		61,011
Total segment assets are allocated based on where the assets are located.
		2015 £'000	2014 £'000
Total segment assets
Europe		20,529	19,231
Rest of the World		55	60
		20,584	19,291

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

	2015 £'000	2014 £'000
Capital expenditure
Europe	1,165	489
Rest of World	-	-
	1,165	489

	2015 £'000	2014 £'000
Analysis of revenue by category
Sale of goods	95	137
Revenue from services	63,648	60,874
	63,743	61,011

4. FINANCE COSTS

	2015 £'000	2014 £'000
Interest payable on bank loans and overdrafts	58	95
Other interest payable	33	30
Pension scheme finance costs	511	231
Total finance costs	602	356
Bank interest receivable	-	(9)
Total finance credit	-	(9)
Net finance costs	602	347

5. TAXATION

	2015 £'000	2014 £'000
Current tax
UK Corporation tax at 20.25%/20% (2014: 21.5%)	(417)	(403)
Foreign tax	(22)	(24)
Adjustment in respect of prior years	41	(8)
Total current tax (charge)/credit	(398)	(435)
Deferred tax
Origination and reversal of timing differences	(216)	(630)
Impact of change in the UK corporation tax rate	-	(77)
Total deferred tax charge	(216)	(707)
Tax charge on profit on ordinary activities	(614)	(1,142)

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the standard rate of corporation tax in the UK of 20.0% as follows:

Tax on profit on ordinary activities

	2015  £'000	2014 £'000
Profit on ordinary activities before tax	3,161	3,359
Profit on ordinary activities at standard rate of UK corporation tax of 20.25%/20% (2014: 21.5%/20%)	(638)	(719)
Effects of:
- income/(expenses) not deductible for tax purposes	22	(354)
- tax losses for which no deferred tax asset has been previously recognised	2	8
Re-measurement of deferred tax asset due to changes in the UK corporation tax rate	-	(77)
Total tax charge	(614)	(1,142)

6.DIVIDENDS

A dividend in respect of the year ended 31 December 2015 of 1.5p per share, amounting to a total dividend of £398,000 is to be proposed at the Annual General Meeting on 15 June 2016. The figures contained in this Preliminary Announcement do not reflect this proposed dividend.

7. EARNINGS PER SHARE

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

	31 December 2015 £'000	31 December 2014 £'000
Profit attributable to equity holders of the Company	2,712	2,455
	31 December 2015 Thousands	31 December 2014 Thousands
Weighted average number of ordinary shares in issue	26,171 714	26,285 1,011
Adjustment for share options
Weighted average number of ordinary shares for diluted earnings per share	26,885	27,296

	31 December 2015 Pence	31 December 2014 Pence
Basic earnings per share	9.73	9.34
Fully diluted earnings per share	9.47	8.99

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

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

8. NOTES TO THE CASH FLOW STATEMENT

Cash generated from/(used in) operations

		2015	2014
		£'000	£'000
Profit/(loss) for the year after tax		2,547	2,217
Adjustments for:
-	Taxation	614	1,142
-	Finance costs	91	116
-	Interest received	-	-
-	Depreciation	371	387
-	Amortisation of intangible assets	205	71
-	Impairment of investments in subsidiaries	-	-
-	(Profit)/loss on sale of property, plant and equipment	(6)	7
-	Foreign currency translation	(55)	83
-	(Decrease)/increase in provisions	(384)	87
-	Share option charge	184	92
-	Movement in retirement benefit obligation	(336)	(552)
-	Decrease in non-current other receivables	14	35
Changes in working capital (excluding the effects of exchange differences on consolidation):
-	Increase in inventories	(4)	(2)
-	Increase in trade and other receivables	(970)	(270)
-	Increase/(decrease) in trade and other payables	410	(225)
Cash generated from/(used in) operations		2,681	3,188

9. RECONCILIATION OF MOVEMENT IN NET DEBT

		As at 1 January 2015 £000	Non cash movement £000	Cash Flow £000	Foreign exchange £000	As at 31 December 2015 £000
Cash and cash equivalents		3,770	-	(132)	(17)	3,621
Bank overdrafts		(3,764)	-	160	-	(3,604)
		6	-	28	(17)	17
Finance lease		-	(24)	10	-	(14)
Invoice finance		(621)	-	(56)	-	(677)
Net debt		(615)	(24)	(18)	(17)	(674)

Financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under either Section 498(2) or (3) of the Companies Act 2006.

Report and Accounts

Copies of the 2015 Annual Report and Accounts will be posted to shareholders in May.  Further copies may be obtained by contacting the Company Secretary at the registered office.  Alternatively, the 2015 Annual Report and Accounts will be available to download from the investor relations section on the Company's website www.christiegroup.com 

Key dates

The Annual General Meeting of the Company is scheduled to take place at 10.30am on Wednesday 15th June 2016 at Whitefriars House, 6 Carmelite Street, London, EC4Y 0BS. 

Group Companies

Professional Business Services

Christie & Co

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

www.christie.com www.christiecorporate.com

Christie Finance

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

www.christieinsurance.com

Pinders

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

www.pinders.co.uk

Stock & Inventory Systems & Services

Orridge

Orridge is Europe's longest established stocktaking business and specialises in all fields of retail stocktaking including high street, warehousing and factory operations, as well as supply chain services. Orridge prides itself on the speed with which it supplies high-quality management information to its clients.

www.orridge.co.uk

Venners
Venners is the leading supplier of stocktaking, inventory, consultancy services and related stock management systems to the hospitality industry. Venners is the largest and longest established stock audit company in the sector in the UK.

www.venners.com

Vennersys
Vennersys operates in the UK and North America and delivers online Cloud-based ticketing sales and admission Systems to visitor attractions such as historic houses and estates, museums, zoos, safari parks, aquaria and cinemas. It has over 20 years' experience delivering purpose-designed solutions for clients' ticketing, admissions, EPoS and food and beverage sales requirements.

www.vennersys.com  www.vennersys.ca

 

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