REG - Christie Group PLC - Interim Results
18/09/2023 07:00
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RNS Number : 6771M Christie Group PLC 18 September 2023
18 September 2023
Christie Group plc
Interim Results for the six months ended 30 June 2023
Challenging H1 performance as PFS division is impacted by decline in
transactional volumes
Christie Group plc ('Christie Group' or the 'Group'), the leading provider of
Professional & Financial Services (PFS) and Stock & Inventory Systems
& Services (SISS) to the hospitality, leisure, healthcare, medical,
childcare & education and retail sectors, today announces its Interim
Results for the six months ended 30 June 2023.
Overview
As reported in our most recent trading update, the Group experienced a
disappointing H1 as a result of delays in transactions brokered by its agency
and advisory business, Christie & Co. This slowdown reflected lower
activity levels and sentiment in the wider market. While some uncertainty
remains as to the precise timing of transactions, the Group continues to
expect a more positive H2 trading performance.
Financial Headlines
· Revenues down by 1.6% to £33.1m (2022: £33.7m), principally due
to a decline in transactional volumes in our agency business
· Operating loss of £1.4m (2022: £2.3m profit), as previously
indicated
· Employee costs up 8.0% to £25.2m (2022: £23.3m)
· Other operating expenses up 15.8% to £9.4m (2022: £8.1m)
· PFS revenues down by 8.1% to £20.4m (2022: £22.2m)
· PFS operating loss of £0.4m compared to a £3.2m profit in H1
2022
· SISS revenues up 11.1% to £12.8m (2022: £11.5m)
· SISS operating loss of £1.0m (2022: £0.9m)
· Borrowings reduced to £1.7m (2022: £5.4m) as CLBILS loan fully
repaid
· Pension liabilities reduced to £0.9m (2022: £8.0m) as both
defined benefit schemes remain in surplus
· Cash and cash equivalents balance of £2.9m (2022: £6.2m)
· Board declares an interim dividend of 0.5p; H1 2022: 1.25p per
share
Operational Headlines
· Transactional volumes decreased significantly in H1 of 2023 when
compared to the previous two years
· While transaction volumes during H1 have been disappointing, our
teams have been busy on a number of significant portfolio assignments in the
Dental, Healthcare, Hotels and Pubs sectors with an encouraging number of
exchanges having already occurred and more anticipated in H2
· More positive performances have been seen in the Valuation,
Business Appraisal and Finance Brokerage operations
· Hospitality stocktaking business has continued its positive
post-Covid recovery
· Pharmacy and Supply Chain operations have traded well in H1
· UK Retail stocktaking and visitor attraction businesses require
further revenue growth to achieve profitability
Current trading
· We anticipate an improvement in transactional volumes by the end
of Q3 and into Q4, based on current levels of deal activity and our pipelines
of instructed work, but uncertainty remains as to the timing of transactions
which will exchange in 2023 as opposed to 2024
· Early H2 performance in our valuation and appraisal operations
and our finance brokerage business have been strong
· Within our SISS division, our hospitality, pharmacy, supply chain
and Benelux operations are all trading positively, while UK retail stocktaking
remains challenging
· H2 has begun more positively for our visitor attraction software
business with a number of further new business wins and increasing levels of
upsells to existing clients.
Dan Prickett, Chief Executive, commented:
"An undoubtedly disappointing H1 performance which resulted in an operating
loss as was previously indicated in our 7(th) August trading update. This was
borne out of changing economic conditions which have served to frustrate
transactional activity. Nonetheless, we have seen encouraging performance so
far this year in other parts of the Group, and we are now free of pension
deficit repair obligations and term loan repayments, with a positive cash
balance. We anticipate more positive transactional activity levels resuming
once the market has adjusted to changes in interest rates and inflation."
Enquiries:
Christie Group plc
Daniel Prickett 07885 813101
Chief Executive
Simon Hawkins 07767 354366
Group Finance Director
Shore Capital
Patrick Castle/Iain Sexton 020 7408 4090
Nominated Adviser & Broker
Notes to Editors:
Christie Group plc (CTG.L), quoted on AIM, is a leading professional business
services group with 38 offices across the UK and Europe, catering to its
specialist markets in the hospitality, leisure, healthcare, medical, childcare
& education and retail sectors.
Christie Group operates in two complementary business divisions:
Professional & Financial Services (PFS) and Stock & Inventory Systems
& Services (SISS). These divisions trade under the brand names: PFS
- 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 valued 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.
The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Article 7 of the UK Market
Abuse Regulation (EU) No. 596/2014 which is part of the UK law by virtue of
the European Union (Withdrawal) Act 2018.
For more information, please go to https://www.christiegroup.com
(https://www.christiegroup.com)
Chief Executive's review
As reported in our most recent trading update, the Group experienced a
disappointing H1 as a result of delays in transactions brokered by its agency
and advisory business, Christie & Co. This slowdown in revenue reflected
lower activity levels and sentiment in the wider market and was as already
reported by a number of competitors. The Group continues to expect a more
positive H2 trading performance, as the market begins to adapt to rising costs
of debt. Nonetheless, uncertainty remains on the precise timing of
transactions reaching contractual exchange and the degree to which
transactions currently scheduled for 2023 exchange do reach that stage will be
key to our full year outcome and the strength of our H2 performance.
Financial Review
The Group reported revenues of £33.1m (2022: £33.7m) and an operating loss
of £1.4m (2022: £2.3m operating profit). The £3.7m deterioration in H1
profitability from a year earlier was attributable almost entirely to the
changed performance of the Professional and Financial Services ("PFS")
division, which saw revenues fall by 8.1% to £20.4m (2022: £22.2m) and the
operating result by £3.6m generating a H1 operating loss of £0.4m (2022:
£3.2m profit).
The Stock & Inventory Systems and Services ("SISS") division saw revenues
increase by 11.1% to £12.8m (2022: £11.5m) but delivered an operating loss
of £1.0m (2022: £0.9m), where cost increases were not matched by the level
of revenue growth.
Employee benefit expenses increased by £1.9m to £25.2m from £23.3m
reflecting headcount recruitment in those areas seen as medium and long term
growth opportunities in our PFS division, while also reflecting strong
inflationary pressures on salaries in a competitive marketplace for our talent
and the need to retain the sector-leading expertise in our teams. At the same
time, increased activity levels in our stocktaking businesses have required
additional manning to facilitate that work.
Other operating expenses also increased from £8.1m to £9.4m, with increased
expenditure on marketing, PR and insurance cost inflation.
Despite the H1 trading performance, the Group's balance sheet debt position
has improved from a year ago. The Group ended H1 having fully repaid the
£6.0m Coronavirus Large Business Interruption Loan it borrowed in June 2020
and no longer has any term debt on its balance sheet.
The Group's two defined benefit pension schemes, which moved into surplus
during H2 of 2022, remained in significant surplus at 30(th) June 2023,
meaning the Group has no deficit repair payment obligations to meet. Deficit
repair payments have represented a considerable use of Group cash since 2006.
The combination of H1 trading performance and commissions and bonuses payable
in relation to 2022's performance, mean that the Group's cash balance had
decreased by the end of the period to £3.6m (2022: £8.6m). The Group
maintains all of its banking facilities and traditionally experiences a
stronger operating cashflow inflow during H2.
In seeking to balance its recognition of a disappointing H1 performance with
its current expectation of a more positive H2 trading performance, the Board
has declared an interim dividend of 0.5p per share (H1 2022: 1.25p) which will
be paid on 3 November 2023 to shareholders on the register on 6 October 2023.
Professional & Financial Services Division.
Transactional volumes decreased significantly in H1 of 2023 compared to the
activity levels experienced in the previous two years, as deal times
lengthened reflecting the increased complexities of the economic environment,
higher financing costs and inflationary pressures on businesses. These factors
were experienced across the range of sectors in which Christie & Co
operate.
Notwithstanding, Christie & Co's team have been busy on a number of larger
portfolio assignments in the Dental, Healthcare, Hotels and Pubs sectors.
Exchanges on those portfolio assignments have already occurred with more
expected to take place during H2 and potentially into the early part of 2024.
As previously indicated, those H2 revenue expectations have already been
revised to reflect a change in disposal strategy by certain vendors who have
opted to retain a number of assets in the near-term, where previously Christie
& Co had been mandated to market the full estate.
Internationally, Christie & Co have been particularly active in France
during H1 of 2023 with a number of Hotel sales completed during the period,
and the team completed a successful operator search in Venice in relation to
the historical Hotel Bonvecchiati.
Towards the end of H1, Christie & Co also signalled its expansion
ambitions on the continent by appointing a Head of Healthcare in Germany as
part of a wider strategy looking beyond a single-sector focus in mainland
Europe.
The Group's UK advisory teams have also been busy and are expected to remain
so through H2. Valuation enquiry and instruction levels have remained robust
in Christie & Co, and Pinders' own business appraisal activity levels have
been very encouraging after a slower start to the year with its own appraisal
pipelines reaching record levels in the early part of H2.
The Group's finance brokerage operation, Christie Finance, also experienced a
slower start to the year but the uptick in activity levels since then has been
very positive. Lender underwriting has involved increased levels of due
diligence which has slowed the process for loan offers being advanced.
Nonetheless, the aggregate value of loan offers secured during H1 by Christie
Finance increased by 16% and the business continued to invest in growing its
headcount of brokers, most notably in its growing Unsecured division where the
aggregate value of instructions increased year-on-year by 120%.
Christie Finance ended H1 with a total pipeline across its Core, Debt Advisory
and Unsecured divisions up by 38% on a year earlier, and up 26% on 31(st)
December 2022.
Stock & Inventory Systems & Services
The Group's Hospitality stock audit business, Venners, has continued its
post-Covid recovery with a positive and encouraging H1 performance. Strong
demand for its services has been reflected with continuing high levels of
successful new business quotes, and despite a continuing challenging
recruitment market, the business has been more successful in growing and
retaining its stock auditor headcount than during 2022. Alongside its core
stock audit activities, the business has also delivered successful outcomes
for clients through its Compliance and Consultancy services, identifying over
£0.5m of supply chain errors for one client.
Orridge, the Group's retail stocktaking operation which operates in the UK and
Europe, has had a mixed performance during the period. Challenges remain in UK
retail stocktaking, where the pipeline of new business opportunities is H2
weighted and a long-standing and significant client entered administration in
H2.
Conversely, the Pharmacy and Supply Chain operations within Orridge have both
performed ahead of expectations in H1 and further growth opportunities exist
in both. On the continent, our Benelux operation delivered a profitable H1
despite pressures on direct costs and productivity from inflationary pressures
and stocktaker churn respectively, while our German operation, with a seasonal
H2 weighting to its own business, has a positive outlook for the months ahead.
Our visitor attraction software-as-a-service ("SaaS") business, Vennersys, has
continued to invest in the development of its functionally-rich product. The
volume of new client wins and installations in H1 have been solid and much
improved on the same period in 2022, but with lower average revenue per client
than anticipated resulting from reduced online purchasing by client's
customers, a smaller client hardware profile and fewer visitors. The business
has also seen H1 2023 v H1 2022 revenues impacted by some client attrition.
Outlook
The Group has experienced a challenging H1 as a result of market conditions,
having taken the strategic decision last year to continue to invest in
maintaining and growing its sector specialist teams. The delays in
transactional deals seen in H1 have continued into the summer period, and the
full year outcome will be determined by the number of deals which can be
brought to contractual exchange in the remaining four months of 2023. As
vendors and buyers adjust to the changed economic environment, we anticipate
more normalised levels of activity resuming.
Transactional pipelines have recovered to levels similar to a year ago. Within
these pipelines, at 30(th) June the number of deals in solicitors' hands was
up markedly on six months earlier.
Distressed activity is showing some signs of being on the increase, but still
remains at relatively modest levels when compared historically. Our agency and
advisory teams are ideally placed to support owners and operators in our
specialist sectors, who are seeking to either expand existing portfolios, or
dispose of non-core and underperforming assets.
In our SISS division we have seen encouraging, profitable H1 performances from
our Hospitality, Pharmacy and Supply Chain stocktaking operations. Further
growth is required in our Retail stocktaking businesses and our software
business, the latter of which has begun in H2 well with a number of new client
wins and increased success in upselling to existing clients.
I am grateful to our excellent and committed teams across all of our
businesses, who have worked diligently throughout H1 and who will continue to
do so to deliver the best possible outcome for the year.
We look forward to the remainder of 2023 and beyond with a continuing
confidence in the medium and long term potential of the Group.
Dan Prickett
Chief Executive Officer
Independent Review Report to Christie Group plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six-month period ended
30 June 2023 which comprises the Interim Consolidated Income Statement, the
Interim Consolidated Statement of Comprehensive Income, the Interim
Consolidated Statement of Financial Position, the Interim Consolidated
Statement of Cash Flows, the Interim Consolidated Statement of Changes in
Equity and the related Notes 1 to 16.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with International Accounting Standard
('IAS') 34 "Interim Financial Reporting", as adopted for use in the United
Kingdom and the AIM Rules issued by the London Stock Exchange.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued for use in the United Kingdom. A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in Note 2, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards
adopted for use in the United Kingdom ("UK adopted IFRS"). The condensed set
of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard ('IAS') 34
"Interim Financial Reporting", as adopted for use in the United Kingdom.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the with International Accounting Standard ('IAS') 34
"Interim Financial Reporting", as adopted for use in the United Kingdom and
the AIM Rules issued by the London Stock Exchange.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
This report is made solely to the Company in accordance with guidance
contained in ISRE (UK) 2410 "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our review work has been undertaken so that we might state to the
company those matters we are required to state to them in a review report and
for no other purposes. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our
work, for this report, or for the conclusions we have formed.
MHA, Statutory Auditor
Milton Keynes, United Kingdom
15 September 2023
MHA is the trading name of MacIntyre Hudson LLP, a limited liability
partnership in England and Wales (registered number OC312313)
Consolidated interim income statement
Note Half year to 30 June Half year to 30 June Year ended 31 December 2022
2023 2022 £'000
£'000 £'000 (Audited)
(Unaudited) (Unaudited)
Revenue 4 33,124 33,653 69,192
Other income - government grants - - 34
Employee benefit expenses (25,159) (23,289) (47,390)
7,965 10,364 21,836
Other operating expenses (9,363) (8,087) (16,384)
Operating (loss)/profit (1,398) 2,277 5,452
Finance costs (527) (548) (1,077)
Finance income 62 - 49
Total finance costs (465) (548) (1,028)
(Loss)/profit before tax (1,863) 1,729 4,424
Taxation 5 470 (333) (1,213)
(Loss)/profit for the period after tax (1,393) 1,396 3,211
Earnings per share attributable to equity holders - pence
Basic 6 (5.41) 5.36 12.32
Diluted 6 (5.41) 5.26 12.15
(Loss)/profit for the period after tax is wholly attributable to equity
shareholders of the parent.
All amounts derive from continuing operations.
Consolidated interim statement of comprehensive income
Half year to 30 June Half year to 30 June Year ended 31 December 2022
2023 2022 £'000
£'000 £'000 (Audited)
(Unaudited) (Unaudited)
(Loss)/profit for the period after tax (1,393) 1,396 3,211
Other comprehensive (losses)/income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (11) 75 (119)
Net other comprehensive (losses)/income to be reclassified to profit or loss (11) 75 (119)
in subsequent periods
Items that will not be reclassified to profit or loss:
Re-measurement gains on defined benefit plans 5,340 6,338 20,616
Effect of asset ceiling (5,332) (5,517) (13,896)
8 821 6,720
Tax effect on defined benefit plans (2) (1,585) (3,759)
Tax effect of asset ceiling - 1,380 1,748
(2) (205) (2,011)
Net other comprehensive income not being reclassified to profit or loss in 6 616 4,709
subsequent periods
Other comprehensive income for the period net of tax 6 691 4,590
Total comprehensive (losses)/income for the period (1,398) 2,087 7,801
Total comprehensive (losses)/income for the period is wholly attributable to
equity shareholders of the parent.
Consolidated interim statement of changes in shareholders' equity
Share capital Other reserves £'000 Cumulative Retained earnings Total equity
£'000 translation £'000 £'000
reserve
£'000
Half year to 30 June 2023 (unaudited)
Balance at 1 January 2023 531 5,128 567 2,170 8,396
Loss for the period after tax - - - (1,393) (1,393)
Other comprehensive (losses)/income - - (11) 6 (5)
Total comprehensive losses for the period - - (11) (1,387) (1,398)
Movement in respect of employee share scheme - (506) - - (506)
Employee share option scheme:
- value of services provided - 34 - - 34
Dividends payable - - - (663) (663)
Transfer from share option reserve - (896) - 896 -
Transactions with shareholders - (1,368) - 233 (1,135)
Balance at 30 June 2023 531 3,760 556 1,016 5,863
Half year to 30 June 2022 (unaudited)
Balance at 1 January 2022 531 5,246 686 (4,906) 1,557
Profit for the period after tax - - - 1,396 1,396
Other comprehensive income - - 75 616 691
Total comprehensive income for the period - - 75 2,012 2,087
Movement in respect of employee share scheme - 30 - - 30
Employee share option scheme:
- value of services provided - (30) - - (30)
Dividends payable - - - (520) (520)
Transactions with shareholders - - - (520) (520)
Balance at 30 June 2022 531 5,246 761 (3,414) 3,124
Year ended 31 December 2022 (audited)
Balance at 1 January 2022 531 5,462 686 (4,906) 1,557
Profit for the year after tax - - - 3,211 3,211
Other comprehensive income - - (119) 4,709 4,590
Total comprehensive (losses)/income for the year - - (119) 7,920 7,801
Movement in respect of employee share scheme - (184) - - (184)
Employee share option scheme:
- value of services provided - 66 - - 66
Dividends paid - - - (844) (844)
Transactions with shareholders - (118) - (844) (962)
Balance at 31 December 2022 531 5,128 567 2,170 8,396
Consolidated interim statement of financial position
At 31 December 2022
At 30 June 2023 At 30 June 2022 £'000
£'000 £'000 (Audited)
(Unaudited) (Unaudited)
Note
Assets
Non-current assets
Intangible assets - Goodwill 1,819 1,819 1,843
Intangible assets - Other 1,138 1,032 1,104
Property, plant and equipment 1,167 1,289 1,178
Right of use assets 6,049 4,962 6,397
Deferred tax assets 2,024 2,927 1,565
Other receivables 2,811 2,555 2,811
15,008 14,584 14,898
Current assets
Inventories 28 23 25
Trade and other receivables 8 12,818 13,455 12,437
Current tax assets 399 876 238
Cash and cash equivalents 13 3,646 8,565 8,839
16,891 22,919 21,539
Total assets 31,899 37,503 36,437
Equity
Capital and reserves attributable to the Company's equity holders
Share capital 9 531 531 531
Other reserves 3,760 5,246 5,128
Cumulative translation reserve 556 761 567
Retained earnings 1,016 (3,414) 2,170
Total equity 5,863 3,124 8,396
Liabilities
Non-current liabilities
Trade and other payables 620 625 620
Retirement benefit obligations 10 915 7,989 953
Lease liabilities 8,295 7,401 8,731
Provisions 1,410 1,344 1,383
11,240 17,359 11,687
Current liabilities
Trade and other payables 11 10,271 9,227 11,463
Current tax liabilities 359 220 840
Borrowings 1,707 5,409 1,623
Lease liabilities 1,313 1,048 1,297
Provisions 1,146 1,116 1,131
14,796 17,020 16,354
Total liabilities 26,036 34,379 28,041
Total equity and liabilities 31,899 37,503 36,437
Consolidated interim statement of cash flows
Note Half year to 30 June Half year to 30 June Year ended 31 December 2022
2023 2022 £'000
£'000 (Unaudited) £'000 (Audited)
(Unaudited)
Cash flow from operating activities
Cash (used in)/generated from operations 12 (2,769) (58) 6,306
Interest paid (528) (496) (975)
Tax paid (664) (9) (200)
Net cash (used in)/generated from operating activities (3,961) (563) 5,131
Cash flow from investing activities
Purchase of property, plant and equipment (251) (202) (334)
Proceeds from sale of property, plant and equipment - - 1
Interest received 62 - 49
Intangible asset expenditure (233) (185) (454)
Net cash used in investing activities (422) (387) (738)
Cash flow from financing activities
Repayment of bank borrowings (1,000) (1,000) (2,000)
Proceeds from invoice discounting 316 454 55
Repayment of lease liabilities (898) (488) (925)
Dividends paid - - (844)
Net cash used in financing activities (1,582) (1,034) (3,714)
Net (decrease)/increase in cash (5,965) (1,984) 679
Cash and cash equivalents at beginning of period 8,839 8,167 8,167
Exchange gains/(losses) on euro bank accounts 4 (5) (7)
Cash and cash equivalents at end of period 13 2,878 6,178 8,839
Notes to the consolidated interim financial statements
1. General information
Christie Group plc is a public limited company incorporated in and operating
from England. The Company's ordinary shares are traded on the AIM Market
operated by the London Stock Exchange. Christie Group plc is the parent
undertaking of a group of companies covering a range of related activities.
These fall into two divisions - Professional & Financial Services and
Stock & Inventory Systems & Services. Professional & Financial
Services principally covers business valuation, consultancy & agency,
business mortgages & insurance services and business appraisal. Stock
& Inventory Systems & Services covers stock audit & counting,
consulting, compliance, inventory preparation & valuation and hospitality
& software solutions.
2. Basis of preparation
The interim financial statements have been prepared in accordance with
International Accounting Standard ('IAS') 34 "Interim Financial Reporting", as
adopted for use in the United Kingdom and the accounting policies applied in
the financial statements for the year ended 31 December 2022. Taxes on income
in the interim periods are accrued using the effective tax rate that would be
applicable to expected total annual earnings.
There are no new standards, amendments or interpretations that have been
published and are mandatory from 1 January 2023 that have a material effect on
the 31 December 2023 accounts.
Going concern
Having reviewed the Group and Company's detailed budgets, projections and
funding requirements to 31 December 2024, taking account of reasonable
possible changes in trading performance over this period, the Directors
believe they have reasonable grounds for stating that the Group and Company
have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the Directors continue to adopt the going
concern basis in preparing these interim accounts.
Non-statutory accounts
These consolidated interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting'. The statutory accounts
for the year ended 31 December 2022 have been delivered to the Registrar of
Companies. The auditors reported on these accounts reported the following:
(1) their report was unqualified;
(2) did not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006; and
(3) 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 2023 and 30 June 2022
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.
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 and investments
Goodwill and investments are 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.
(b) Retirement benefit obligations
The assumptions used to measure the expense and liabilities related to the
Group's 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.
Where the present value of the minimum funding contributions exceeds the
present value of the defined benefit obligation and the amounts are not
available as a refund or reduction in future payments, the Company will adjust
the retirement benefit obligation to match the present value of the minimum
funding contributions. The liability recognised in the Statement of Financial
Position, will reflect the present value of the minimum funding contributions.
A corresponding charge will be recognised in other comprehensive income, as
'effect of asset ceiling' in the period which they arise.
Critical accounting judgements and assumptions
The critical judgements made in the process of applying the Group's accounting
policies during the year that have the most significant effect on the amounts
recognised in the financial statements are set out below.
(a) 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.
(b) Revenue recognition
In determining the amount to be recognised on incomplete contracts it is
necessary to estimate the stage of completion. An element of judgement and
estimate is inherent in this process.
3. Critical accounting estimates and judgements (continued)
(c) Property, plant and equipment
Depreciation is derived using estimates of its expected useful life and
residual value, which are reviewed annually. Management determines useful
lives and residual values based on experience with similar assets.
(d) Leases - estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease.
Therefore, it uses its incremental borrowing rate (IBR) to measure lease
liabilities. The IBR therefore reflects what the Group 'would have to pay',
which requires an estimate when no observable rates are available.
4. Segment information
The Group is organised into two main business segments: Professional &
Financial Services (PFS) and Stock & Inventory Systems & Services
(SISS).
The segment results for the period ended 30 June 2023 are as follows:
PFS SISS Other Group
£'000 £'000 £'000 £'000
Total gross segment revenue 20,393 12,789 - 33,182
Inter-segment revenue (58) - - (58)
Revenue 20,335 12,789 - 33,124
Operating loss (384) (1,014) - (1,398)
Finance costs (178) (101) (186) (465)
Loss before tax (562) (1,115) (186) (1,863)
Taxation 470
Loss for the period after tax (1,393)
The segment results for the period ended 30 June 2022 are as follows:
PFS SISS Other Group
£'000 £'000 £'000 £'000
Total gross segment revenue 22,196 11,512 1,904 35,612
Inter-segment revenue (55) - (1,904) (1,959)
Revenue 22,141 11,512 - 33,653
Operating profit/(loss) 3,211 (934) - 2,277
Finance costs (284) (112) (152) (548)
Profit/(loss) before tax 2,927 (1,046) (152) 1,729
Taxation (333)
Profit for the period after tax 1,396
4. Segment information (continued)
The segment results for the year ended 31 December 2022 are as follows:
PFS SISS Other Group
£'000 £'000 £'000 £'000
Total gross segment revenue 47,487 21,815 - 63,902
Inter-segment revenue (110) - - (110)
Revenue 47,377 21,815 - 69,192
Operating profit/(loss) 7,570 (2,118) - 5,452
Finance costs (554) (292) (182) (1,028)
Profit/(loss) before tax 7,016 (2,410) (182) 4,424
Taxation (1,213)
Profit for the year after tax 3,211
Revenue recognised in the period has been derived from the provision of
services provided when the performance obligation has been satisfied.
5. Taxation
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.
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, once performance conditions are met. 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 issued 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.
Half year to Half year to Year ended 31 December 2022
30 June 2023 30 June 2022 £'000
£'000 £'000
(Loss)/profit attributable to the equity holders (1,393) 1,396 3,211
30 June 2023 30 June 2022
6. Earnings per share (continued)
Thousands Thousands 31 December 2022
Thousands
Weighted average number of ordinary shares in issue 25,725 26,065 26,062
Adjustment for share options 373 483 361
Weighted average number of ordinary shares for diluted earnings per share 26,098 26,548 26,423
30 June 2023 30 June 2022
pence pence 31 December 2022
Pence
Basic earnings per share (5.41) 5.36 12.32
Diluted earnings per share (5.41) 5.26 12.15
7. Dividends
A final dividend in respect of 2022 of 2.50p per share, amounting to a
dividend of £663,000, was proposed by the directors and approved by the
shareholders at the Annual General Meeting on 14 June 2023, with the funds
paid to the registrar on 3 July 2023. The funds were transferred to
shareholders on 7 July 2023.
An interim dividend in respect of 2023 of 0.50p per share, amounting to a
dividend of £133,000, was declared by the directors at their meeting on 12
September 2023. These financial statements do not reflect this dividend
payable.
The dividend of 0.50p per share will be payable to shareholders on the record
on 6 October 2023. The dividend will be paid on 3 November 2023.
As at the 31 December 2022, the parent company had distributable reserves of
£10,069,000.
8. Trade and other receivables
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Trade receivables 8,111 8,956 6,945
Less: provision for impairment of receivables (733) (629) (454)
Work in progress 1,631 2,007 1,364
Contract assets 400 466 198
Other debtors 1,110 1,228 1,296
Prepayments 2,299 1,427 3,088
12,818 13,455 12,437
The fair value of trade and other receivables approximates to the carrying
value as detailed above.
9. Share capital
30 June 2023 30 June 2022 31 December 2022
Ordinary shares of 2p each Number £'000 Number £'000 Number £'000
Allotted and fully paid:
At beginning and end of period 26,526,729 531 26,526,729 531 26,526,729 531
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 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.
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 based on 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 defined benefit obligation as at 30 June 2023 is calculated on a
year-to-date basis, using the latest actuarial valuation as at 30 June 2023.
There have been no significant market fluctuations and significant one-off
events, such as plan amendments, curtailments and settlements that have
resulted in an adjustment to the actuarially determined pension cost since the
end of the prior financial year. The defined benefit plan assets have been
updated to reflect their market value at 30 June 2023.
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 2023
after adjusting for the actual contributions to be paid in the period.
The obligation outstanding of £915,000 (30 June 2022: £7,989,000; 31
December 2022: £953,000) includes £915,000 (30 June 2022: £1,100,000; 31
December 2022: £953,000) payable to David Rugg by Christie Group plc. The
movement in the pension liability attributable to David Rugg's pension arises
from a change in the actuarial assumptions used and the discount rate applied.
There have been no changes to the amounts payable to Mr Rugg.
The terms of the schemes are that the Group does not have an unconditional
right to a refund of any surplus. Therefore there is an asset ceiling that
prevents an asset being recognised. The asset ceiling at 30 June 2023 was
£20.0m unrecognised asset (30 June 2022: £5.5m, 31 December 2022: £13.9m).
The Group continues to work closely with the Trustee in managing pension
risks, with the defined benefit schemes closed to new members since 1999 &
2000.
In addition, the Group operates a defined contribution scheme for
participating employees. Payments to the scheme are charged as an employee
benefit as they fall due. The Group has no further payment obligations once
the contributions have been paid.
10. Retirement benefit obligations (continued)
The movement in the liability recognised in the statement of financial
position is as follows:
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Beginning of the period 953 8,997 8,997
Expenses included in the employee benefit expense - 215 201
Contributions paid - (425) (1,567)
Finance costs - 52 102
Pension paid (30) (29) (60)
Actuarial gains recognised (8) (821) (6,720)
End of the period 915 7,989 953
The amounts recognised in the income statement and statement of comprehensive
income are as follows:
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Current service cost 83 215 201
Total included in employee benefit expenses 83 215 201
Net interest cost - 52 102
Total included in finance costs - 52 102
Actuarial gains 5,340 6,338 20,616
Effect of asset ceiling (5,332) (5,517) (13,896)
Total included in other comprehensive income 8 821 6,720
The principal actuarial assumptions used were as follows:
Half year to Half year to 30 June 2022 Year ended 31 December 2022
30 June 2023 % %
%
Discount rate 5.30 3.80 4.80
Inflation rate 3.25 3.30 3.15
Future salary increases 1.00 - 3.25 1.00 - 2.00 1.00 - 2.00
Future pension increases 1.85 - 3.60 2.25 - 3.50 1.80 - 3.45
Assumptions regarding future mortality experience were consistent with those
disclosed in the financial statements for the year ended 31 December 2022.
11. Trade and other payables
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Trade payables 1,126 944 1,311
Other taxes and social security 2,594 2,825 2,729
Other creditors 1,357 1,227 639
Contract liabilities 281 282 217
Accruals 4,913 3,949 6,567
10,271 9,227 11,463
12. Note to the cash flow statement
Cash generated from operations
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Continuing operations
(Loss)/profit for the period (1,393) 1,396 3,211
Adjustments for:
- Taxation (470) 333 1,213
- Finance costs 465 548 1,028
- Depreciation 758 742 1,463
- Amortisation of intangible assets 195 195 388
- Loss/(profit) on sale of PP&E - 6 -
- Foreign currency translation 169 112 (437)
- Increase in provisions 42 8 62
- Payments to ESOT (300) (60) (284)
- Movement in share option charge 34 30 66
- Movement in non-current other receivable - - (256)
Movement in working capital:
- Increase in inventories (3) (8) (10)
- (Increase)/decrease in trade & other receivables (381) (953) 65
- (Decrease) in trade & other payables (1,885) (2,407) (203)
Cash (used in)/generated from operations (2,769) (58) 6,306
13. Cash and cash equivalents
Half year to Half year to Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Cash and cash equivalents 3,646 8,565 8,839
Bank overdrafts (768) (2,387) -
2,878 6,178 8,839
The Group is operating within its existing banking facilities.
14. Related-party transactions
There is no controlling interest in the Group's shares.
During the period rentals of £282,000 (30 June 2022: £256,000; 31 December
2022: £514,000) were payable to Carmelite Property Limited by Christie Group
plc in accordance with the terms of a long-term lease agreement. Carmelite
Property Limited is 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.
15. Subsequent event
On 11 July 2023, the Group announced that David Rugg was stepping down from
the Board with immediate effect. The Group expects to incur some one-off
exceptional costs this financial year relating to Mr Rugg's departure and his
contract of employment, and as such a provision of £2.0m has been made by the
company following the first-half period end.
16. Publication of Interim Report
The 2023 Interim Financial Statements are available on the Company's website
https://www.christiegroup.com (https://www.christiegroup.com)
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