CHRISTIE GROUP PLC — Earnings Release 2013

Mar 31, 2014

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RNS Number : 5060D

Christie Group PLC

31 March 2014

31 March 2014

Christie Group plc

Preliminary results for the 12 months ended 31 December 2013

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 2013.

Key points:

·      Revenue for the year of £54.2m (2012: £56.1m)

·      Revenue in the second half of £28.5m, an 11% increase on first half revenue (£25.7m)

·      Second half operating profit before exceptional items of £1.8m (2012: £0.2m)

·      Full year operating profit before exceptional items of £1.6m (2012: £1.4m)

·      Earnings per share increased to 0.82p per share (2012: loss of 0.33p per share)

·      Increased final dividend proposed of 1p (2012: 0.5p per share)

·      2014 began with strong pipeline of future projects

·      New Christie + Co offices opened in Cardiff and Bordeaux

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

·      Orridge expands further in mainland Europe through the acquisition of its German franchisee

·      Christie Group recognised by the London Stock Exchange as one of '1,000 companies to Inspire Britain'

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

"After a challenging first half the Group performed well in the second half of the year.  The recently announced availability of funds from defined contribution pension schemes will stimulate the business sales market. We have increased operating margins and profitability and enhanced the flexibility of our business."

Enquiries:

Christie Group plc
David Rugg Chief Executive	020 7227 0707
Daniel Prickett Chief Financial Officer	020 7227 0700
Charles Stanley Securities Nominated Adviser & Broker Russell Cook / Carl Holmes	020 7149 6000

Notes to Editors:

Christie Group plc (CTG.L), quoted on AIM, is a leading professional business services group with 43 offices across the UK, Europe and Canada, catering to its specialist markets in the leisure, retail and care sectors.

Christie Group operates in two complementary business divisions: Professional Business Services (PBS) and Stock & Inventory Systems & Services (SISS). These divisions trade under the brand names: PBS - Christie + Co, Pinders, Christie Finance and Christie Insurance: SISS - Orridge, Venners and Vennersys.

Tracing its origins back to 1846, the Group has a long established reputation for offering essential services to client companies in agency, valuation services, investment, consultancy, project management, multi-functional trading systems and online ticketing services, stock audit and inventory management. The diversity of these services provides a natural balance to the Group's core agency business.

For more information, please go to www.christiegroup.com .

CHAIRMAN'S STATEMENT

I am pleased to report our second consecutive increase in full year operating profit from continuing operations and before exceptional items of £1.6m (2012: £1.4m), a 12% increase on the previous year. Our second half performance was encouraging, with a strong second half operating profit of £1.8m.

A full year normalised operating profit of £1.6m represents an improved 2.9% operating profit return (2012: 2.5%) from continuing operations, derived from revenue of £54.2m (2012: £56.1m).  Our second half revenue from continuing operations was £28.5m (2012: £25.9m), in contrast to £25.7m (2012: £30.2m) in the six months to June. As we reported in September, we incurred exceptional costs in the first half of £0.4m (2012: £nil), providing us with a more efficient business for the remainder of 2013 and beyond.

In November, this progress and dynamism were recognised when Christie Group was named as one of "1,000 companies to Inspire Britain" in a report compiled for the London Stock Exchange. This is a pleasing endorsement of our achievements.

Stock & Inventory Systems & Services

After a start to the year which had seen first half revenue contract year-on-year, we saw a strong recovery in the second half resulting in full year revenue of £25.9m, a 1% increase on the previous year (2012: £25.7m).  Improvements in productivity and efficiency resulted in an impressive 49% improvement in operating profit to £1.1m (2012: £0.7m).

Orridge, our retail stocktaking operation, continued its progress in the UK and Europe, winning new business which included Morrisons, Claire's Accessories and Guess.

On 1 September, we acquired a 75% shareholding in our German stocktaking franchisee, now operating as Orridge Inventory Services.  We are already encouraged by commitments from new clients for additional business later in 2014.

Our hospitality stocktaking business Venners, operating in both the UK and Europe, continued its organic growth, illustrated by a 9% increase in the number of assignments undertaken year-on-year. This success continues to be founded on a market-leading offering across a range of services, enabling us to win new clients in the year such as Arena Leisure, Bowlplex, Merlin Inns, Lindley Catering and Silverstone. After opening our first branch outside the UK, our work in Ireland continues to expand in what is proving a fruitful territory for us.

Professional Business Services

We adopted a new regional structure for our transactional business last April.  This has proved effective in making specialist staff available across all regions of the UK as well as centrally.  Our pipelines of deals in progress finished the year over 20% stronger than a year ago, providing us with encouragement as to the volume of transactions we can look forward to completing in 2014.

Throughout 2013 we were able to demonstrate our ability to successfully complete the disposal of prime assets for prices exceeding expectations, such as the Menzies Hotels portfolio, The Metropolitan by COMO hotel on Old Park Lane and the disposal of six high value pubs, including five freeholds, on behalf of Convivial London Pubs. Each of these were reported as a recent sales instruction in my Interim statement.  The speed with which Christie + Co completed the Convivial disposals highlighted the demand for freehold pubs, particularly in London.

Similarly, our corporate teams went into 2014 with more signed mandates than ever before, which bodes well for M & A completions this year.

In Europe, we find the market for privately owned businesses in France subdued because of the uncertainty regarding the Capital Gains Tax charges there. Conversely there appears renewed interest in other Mediterranean countries where asset prices remain at attractive levels.

For the fourth year in succession, Christie + Co has been judged the UK's most active agent in the Leisure and Hotels category by the Estates Gazette. 

At this time, potentially 19,000 bank swaps mis selling cases have been identified, of which half have so far been investigated.  Our expectation is of a pick-up in re-banking applications through Christie Financefollowing the banks' payments of compensation.   This will, in turn, trigger an increase in bank-led valuation instructions.

In our first full year following the acquisition in 2012 of pharmacy specialist Orridge Business Sales, we achieved the sale of pharmacy businesses at the rate of one per week. Orridge Business Sales is now fully integrated into Christie + Co.

Outlook

The year started well in the UK for revenue generation where we currently enjoy a cost base lower than the corresponding period last year.  The continental recovery lags behind the UK and is uneven but we are seeing encouraging signs in the Germanic region and parts of the Mediterranean, most notably Spain.

With both a strategy and platform for growth in our established areas of expertise, an increase in contracted work and mandated assignments and minimal gearing, we are well placed for the future.

I would like to thank all of my colleagues who worked for our Group companies last year for their energy and expertise, applied for the benefit of our clients.

Your board recommend an increased final dividend of 1p per share (2012: 0.5p) for the year in addition to the 0.5p per share (2012: 0.5p) interim dividend. If approved, the dividend will be paid on 4 July 2014 to those shareholders on the register on 6 June 2014.

Philip Gwyn

Chairman

CHIEF EXECUTIVE'S REVIEW

After a challenging first half the Group performed well in the second half of the year.  We have increased profitability and enhanced the flexibility of our business.

An agile, resilient organisation

Christie Group's ability to adapt has been central to our continuing prosperity. Our Group has faced challenging market environments every year since 2008. And every year, we have demonstrated our ability to rise to each new challenge. Through our innovative responses we have forged an agile organisation.

In 2013, there were, finally, clear signs that the UK is back on a path to growth. We have the capabilities and the resources to take advantage of improving economic conditions.  With positive sentiment flowing back into the economy, we are well placed to benefit.

Our own performance mirrored the economic environment. The year began slowly, but our business gathered momentum in the second half of the year. We entered 2014 with a strong pipeline of future projects.

Our business structure has always served us well. Revenue is split evenly between transaction-related services and services that enhance operational efficiency. Professional Businesses Services (PBS) profitability is more reliant on market conditions. This is complemented by the relatively stable earnings generated by our Stock & Inventory Systems and Services (SISS) businesses. It makes for a balanced, broadly based organisation with proven defensive qualities.

Adapting to changing market conditions

Christie Group provides specialist, in-depth, business intelligence in the retail, care and leisure sectors. Our services relate to the entire lifecycle of a business - from initial acquisition, through day-to-day operations, all the way to an eventual sale.

Our ability to bring experience and expertise to bear on particular business issues has long been a defining characteristic for the Group. Christie companies are renowned for their in-depth expertise.

We make it our mission to deliver the highest level of service to each and every customer.  We continue to look closely at ways to improve and adapt our operations.

Technology continues to shift market topologies. As information becomes increasingly commoditised there is a growing understanding that it is depth not breadth of expertise that is the major market differentiator. Our customers want detailed, highly specific advice. This plays to our strengths.

Restructuring UK operations

So that we can continue to serve our customers we continue to pay close attention to our cost base. Having streamlined our stocktaking businesses in 2012, we focused in 2013 on our Professional Business Services division. In particular, we took a strategic decision to regionalise Christie & Co's UK operations. Its fourteen offices are now managed from London and five regions.

This restructuring reduced costs and improved the scalability of the business. We incurred some one-off costs from this in the first half of the year, but by the second half, profitability was much improved. The Group also benefitted from the increased momentum in the economy as the year progressed.

Removing boundaries

The decision to regionalise Christie & Co is part of a broader-based initiative to remove boundaries internally. By developing boundary-less operations supported by technology we are improving service provision. Our people are encouraged to share knowledge and assignments across territories and between businesses. By sharing resources we are able to field relevant professionals and respond to customers' specific requirements more directly.

Operating in the digital space

At Group level, we are investing in high quality systems to support information exchange. We adopt technologies that improve operational flexibility. As part of this process we are working to locate the Group's intellectual property centrally and make it accessible to those in the field.

Developing and adopting common standards across the Group has had numerous benefits. Codifying many of our core activities has helped us to clarify business objectives and the resources we need to deliver them effectively. It is making it easier to develop partnerships and work with franchisees.

The work is also revealing new sources of revenue. We are developing new types of service that extract valuable information from this centralised data.

For instance, anonymised and aggregated data from our valuation business is helping banking clients assess their credit risk to specific kinds of business. By benchmarking the profitability of a sector or business type they are better able to anticipate borrowers' revenue patterns.

Consultancy services

Consultancy services that leverage our sector-specific expertise are becoming more important, especially for our growing list of corporate clients.

Our expertise is widely acknowledged. In a recent portfolio sale, eleven of the twelve private equity bidders asked us to act for them. It is indicative of the way the Group is perceived in the professional market.

We advise private equity houses on the dynamics of specific categories of business within their debt and asset portfolios. We help property investors to appreciate the likely earnings streams of their commercial tenants. Our advice is informing their strategic and portfolio management decisions.

International operations

It takes time to establish operations capable of delivering the high level of service that is our hallmark. Internationally, our approach has been to grow scale cautiously in line with increasing demand.

This year we extended our footprint in France with an additional office in Bordeaux.

In September, our stocktaking business Orridge took control of its German franchisee. This acquisition gives us direct access to territories within the German sphere of influence, including Switzerland, Italy, Croatia, Montenegro, Poland and CEE nations. With our strong footprint in France, Spain and the Benelux region we are now well placed to deliver a comprehensive service to pan-European retailers.

Financial flexibility

Our supportive shareholder base is a key strength for the business. It allows us to operate with a high degree of flexibility. We funded the German acquisition through a share placement amounting to 5 per cent of the equity. This is the first extension in our capital base for 25 years and it was heartening to discover the level of investor support for the business. This placement crystallised the fact that there is significant untapped demand for larger tranches of Christie equity than normally available.

Professional Business Services

The slowdown at the end of 2012 continued into 2013 and led to tough trading conditions for Professional Business Services during the first half of the year. We took this opportunity to reorganise the business along regional lines. In the second half, PBS rapidly gained momentum. It ended 2013 strongly with a good pipeline of future deals.

Our newly created Medical Sector division performed strongly. Christie & Co managed 55 pharmacy sales during the year. It was easily the most active participant in the UK market.

The return of entrepreneurial owner/operator was a feature of the year under review. Private investors have held back from buying businesses in previous years, but there is now a perception that there is good value to found. The market was bolstered by positive equity as a strong recovery in the housing market took hold.

As the swaps compensation scheme gathers pace, there will be numerous owners of businesses who had been struggling to meet their obligations who may now take the opportunity to sell their companies. Fortunately there is now sufficient pent-up demand to absorb this additional supply. The result may well be that volumes increase without falling valuations. This is likely to benefit our businesses in 2014.

It may well be that in years to come investors will look back with fondness on the current period. The combination of low interest rates, availability, relatively low prices and sensible valuation makes this a very attractive time to invest in a business.

Stock & Inventory Systems & Services

Our stocktaking and auditing businesses performed steadily, delivering earnings across the year. Both businesses continue to focus on service excellence and close control of costs.

Orridge continues to build on its status as the UK's premier stocktaking provider in retail and pharmacy sectors. It is gaining traction with UK supermarkets and extending its European footprint. Venners produced another strong set of results, with earnings growth led by strong performance of its stock audit function.

Looking ahead

We increased our profitability in 2013 and are focused on profitable growth. We have made a good start, with a strong pipeline of business at the end of the year.

Christie Group today is more focused, flexible and resilient than ever. We have grown our ability to operate internationally and at scale. Our expertise and operational capabilities are recognised in an increasingly professionalised market.

We have made continued progress towards achieving our strategic goal of rebuilding profits to the levels seen before the credit crunch. We enter 2014 as a fitter organisation, more attuned to the changing needs of today's markets.

The economic picture appears to be improving, but whatever the prospects, with our strong track record, extensive and growing client list, and more flexible business model, we can face the future with confidence. 

David Rugg

Chief Executive

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

	Note	2013 Total £'000	2012       Total (*Restated) £'000
Continuing operations:
Revenue		54,154	56,087
Employee benefit expenses		(36,121)	(38,471)
		18,033	17,616
Depreciation and amortisation		(564)	(548)
Impairment (charge)/credit		(53)	14
Other operating expenses		(15,849)	(15,678)
Operating profit before exceptional items		1,567	1,404
Exceptional items **		(442)	-
Operating profit after exceptional items		1,125	1,404
Finance costs	4	(120)	(97)
Finance income	4	4	1
Pension scheme finance costs	4	(468)	(237)
Total finance costs	4	(584)	(333)
Profit before tax from continuing operations		541	1,071
Taxation	5	(351)	(386)
Profit for the year after tax from continuing operations		190	685
Discontinued operations:
Loss for the period from discontinued operations	7	(29)	(808)
Profit / (loss) for the period after tax		161	(123)
Profit / (loss) for the period after tax attributable to:
Equity shareholders of the parent		212	(83)
Non-Controlling interest		(51)	(40)
		161	(123)
Earnings per share attributable to equity holders - pence
Profit / (loss) attributable to the equity holders of the Company
-Basic	8	0.82	(0.33)
-Fully diluted	8	0.80	(0.33)
Profit from continuing operations attributable to the equity holders of the Company
-Basic	8	0.93	2.89
-Fully diluted	8	0.91	2.86

*Certain amounts shown here do not correspond to the annual consolidated financial statements as at 31 December 2012. The restatement relates entirely to the adoption of changes to the accounting standard IAS 19 "Employee Benefits", further detail is provided in Note 1.

**Exceptional costs for the year to 31 December 2013 relate to the restructuring of operations.

Items previously disclosed as exceptional items for the year ended 31 December 2012 have now been disclosed as discontinued operations (Note 7).

Consolidated Statement of Comprehensive Income (continued)

For the year ended 31 December 2013

			Year ended 31 December 2013 £'000	Year ended  31 December 2012 (*Restated) £'000
	Profit / (loss) for the period after tax		161	(123)
	Other comprehensive (losses) / income:
	Items that may be reclassified subsequently to profit or loss:
	Exchange differences on translating foreign operations		46	3
	Net other comprehensive (losses) / income to be reclassified to profit or loss in subsequent periods		46	3
	Items that will not be reclassified to profit or loss:
	Actuarial gains/(losses) on defined benefit plans *		4,839	(6,274)
	Income tax effect		(1,183)	1,443
	Net other comprehensive income / (losses) not being reclassified to profit or loss in subsequent periods		3,656	(4,831)
	Other comprehensive income / (losses) for the period, net of tax		3,702	(4,828)
	Total comprehensive income  / (losses) for the period		3,863	(4,951)

Total comprehensive income/ (losses) attributable to:

Equity shareholders of the parent		3,914	(4,911)
Non-Controlling interest		(51)	(40)
		3,863	(4,951)

*Certain amounts shown here do not correspond to the annual consolidated financial statements as at 31 December 2012. The restatement relates entirely to the adoption of changes to the accounting standard IAS 19 "Employee Benefits", further detail is provided in Note 1.

Consolidated Statement of Changes in Shareholders' Equity

As at 31 December 2013

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 2012 *	505	3,685	454	(3,927)	(35)	682
Loss for the year after tax *	-	-	-	(83)	(40)	(123)
Other comprehensive losses for the year after tax *	-	-	-	(4,831)	-	(4,831)
Exchange differences on translating foreign operations	-	-	3	-	-	3
Total comprehensive income / (losses) for the period	-	-	3	(4,914)	(40)	(4,951)
Movement in respect of employee share scheme	-	935	-	(1,021)	-	(86)
Employee share option scheme:
-value of services provided	-	68	-	-	-	68
Dividends paid	-	-	-	(251)	-	(251)
Balance at 31 December 2012 *	505	4,688	457	(10,113)	(75)	(4,538)
Balance at 1 January 2013	505	4,688	457	(10,113)	(75)	(4,538)
Profit /(loss) for the year after tax	-	-	-	212	(51)	161
Other comprehensive income for the year after tax	-	-	-	3,656	-	3,656
Exchange differences on translating foreign operations	-	-	46	-	-	46
Total comprehensive (losses) / income for the period	-	-	46	3,868	(51)	3,863
Transfer of non-controlling interest on liquidation	-	-	-	(75)	75	-
Movement in respect of employee share scheme	-	19	-	(23)	-	(4)
Employee share option scheme:
-value of services provided	-	61	-	-	-	61
Proceeds from shares issued	26	758	-	-	-	784
Dividends paid	-	-	-	(257)	-	(257)
Balance at 31 December 2013	531	5,526	503	(6,600)	(51)	(91)

*Certain amounts shown here do not correspond to the annual consolidated financial statements as at 31 December 2012. The restatement relates entirely to the adoption of changes to the accounting standard IAS 19 "Employee Benefits", further detail is provided in Note 1.

Consolidated Statement of Financial Position

At 31 December 2013

		2013 £'000	2012 (*Restated) £'000	2011 (*Restated) £'000
Assets
Non-current assets
Intangible assets - Goodwill		1,793	1,011	1,011
Intangible assets - Other		507	403	145
Property, plant and equipment		1,088	1,232	606
Deferred tax assets		2,628	4,401	3,518
Available-for-sale financial assets		485	300	300
Other receivables		500	316	904
		7,001	7,663	6,484
Current assets
Inventories		-	1	1
Trade and other receivables		10,819	10,670	11,225
Current tax assets		190	177	72
Cash and cash equivalents		1,747	1,314	1,059
		12,756	12,162	12,357
Total assets		19,757	19,825	18,841
Equity
Share capital		531	505	505
Fair value and other reserves		5,526	4,688	3,685
Cumulative translation reserve		503	457	454
Retained earnings		(6,600)	(10,113)	(3,930)
		(40)	(4,463)	714
Non-Controlling interest		(51)	(75)	(35)
Total equity		(91)	(4,538)	679
Liabilities
Non-current liabilities
Retirement benefit obligations		4,796	10,000	4,292
Provisions		561	734	554
		5,357	10,734	4,846
Current liabilities
Trade and other payables		8,365	8,047	8,265
Borrowings		4,483	3,440	3,091
Provisions		1,643	2,142	1,960
		14,491	13,629	13,316
Total liabilities		19,848	24,363	18,162
Total equity and liabilities		19,757	19,825	18,841

*Certain amounts shown here do not correspond to the annual consolidated financial statements as at 31 December 2012. The restatement relates entirely to the adoption of changes to the accounting standard IAS 19 "Employee Benefits", further detail is provided in Note 1.

Consolidated Statement of Cash Flows

For the year ended 31 December 2013

	Note	2013 £'000	2012 £'000
Cash flow from operating activities
Cash (used in) / generated from operations	9	(355)	1,422
Interest paid		(120)	(116)
Tax received		225	72
Net cash (used in) / generated from operating activities		(250)	1,378
Cash flow from investing activities
Acquisition of subsidiary		(140)	(4)
Purchase of property, plant and equipment (PPE)		(297)	(1,072)
Proceeds from sale of PPE		13	13
Intangible asset expenditure - software		(267)	(146)
Investment in available-for-sale asset		(185)	-
Interest received		4	1
Net cash used in investing activities		(872)	(1,208)
Cash flow from financing activities
Proceeds from issuance of share capital		784	-
Proceeds from / (repayments of) invoice finance		18	(435)
Dividends paid		(257)	(251)
Net cash generated from / (used in) financing activities		545	(686)
Net decrease in cash		(577)	(516)
Cash and cash equivalents at beginning of year		(1,538)	(1,009)
Exchange losses on euro bank accounts		(15)	(13)
Cash and cash equivalents at end of year	10	(2,130)	(1,538)

Notes to the Consolidated Financial Statements

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 2014.

The accounting policies adopted are consistent with those applied in the 2012 financial statements, with the exception of changes to IAS 19 which are detailed below.

New and amended standards adopted by the group

The following standards have been adopted by the group for the first time for the financial year beginning on or after1 January 2013 and have a material impact on the group:

Amendment to IAS 1, 'Financial statement presentation' regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in 'other comprehensive income' (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments).

IAS 19, 'Employee benefits' was revised in June 2011. The changes on the group's accounting policies has been as follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). Within the Consolidated Statement of Financial Position, the unrecognised actuarial losses recognised up to 31 December 2012 on the removal of the corridor amounted to £8,387,000. Within the Consolidated Income Statement the following additional amounts were recognised under the IAS 19 restatement: an additional IAS 19 credit of £40,000 disclosed within employee benefit expenses, £237,000 pension scheme finance costs. Within the Consolidated Statement of Comprehensive Income actuarial losses of £6,274,000 were recognised in 2012. Within the Company Statement of Financial Position, the unrecognised actuarial losses up to 31 December 2012 amounted to £722,000. Within the Company Income Statement the following additional amounts were recognised under the IAS 19 restatement: an additional IAS 19 credit of £22,000 disclosed within employee benefit expenses, £23,000 pension scheme finance costs. Within the Company Statement of Comprehensive Income actuarial losses of £428,000 were recognised in 2012.

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 2014 or later periods and have not been early adopted. It is anticipated that none of these new standards, interpretations and amendmentscurrently in issue at the time of preparing the financial statements will have a material effect on the consolidated financial statements of the Group or Company.

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 continuing operations for the year ended 31 December 2013 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
Total gross segment sales	28,404	25,854	2,473	56,731
Inter-segment sales	(104)	-	(2,473)	(2,577)
Revenue	28,300	25,854	-	54,154
Operating profit/(loss) before exceptional items	936	1,100	(469)	1,567
Exceptional items	(442)	-	-	(442)
Operating (loss)/profit after exceptional items	494	1,100	(469)	1,125
Net finance (costs)/credit	(455)	(128)	(1)	(584)
Profit before tax				541
Taxation				(351)
Profit for the year after tax				190

The segment results for continuing operations for the year ended 31 December 2012 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
Total gross segment sales	30,490	25,701	2,340	58,531
Inter-segment sales	(104)	-	(2,340)	(2,444)
Revenue	30,386	25,701	-	56,087
Operating profit	606	740	58	1,404
Net finance (costs)/credit	(313)	(33)	13	(333)
Profit before tax				1,071
Taxation				(386)
Profit for the year after tax				685

Other segment items included in the income statements for continuing operations for the years ended 31 December 2013 and 2012 are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
31 December 2013
Depreciation and amortisation	284	278	2	564
Impairment of trade receivables	17	36	-	53
31 December 2012
Depreciation and amortisation	265	280	3	548
Impairment of trade receivables	2	(16)	-	(14)

The segment assets and liabilities at 31 December 2013 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	7,691	6,162	3,086	16,939
Deferred tax assets				2,628
Current tax assets				190
				19,757
Liabilities	8,747	5,091	1,527	15,365
Borrowings				4,483
				19,848
Capital expenditure	116	448	-	564

The segment assets and liabilities at 31 December 2012 and capital expenditure for the year are as follows:

	Professional Business Services £'000	Stock & Inventory Systems &  Services £'000	Other £'000	Group £'000
Assets	7,970	4,851	2,426	15,247
Deferred tax assets				4,401
Current tax assets				177
				19,825
Liabilities	13,354	5,608	1,961	20,923
Borrowings				3,440
				24,363
Capital expenditure	1,060	413	1	1,474

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.

	2013 £'000		2012 £'000
Revenue
Europe	53,607		55,393
Rest of the World	547		694
	54,154		56,087
Total segment assets are allocated based on where the assets are located.
		2013 £'000		2012 £'000
Total segment assets
Europe		16,778		15,115
Rest of the World		161		132
		16,939		15,247

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

	2013 £'000	2012 £'000
Capital expenditure
Europe	564	1,469
Rest of World	-	5
	564	1,474

	2013 £'000	2012 £'000
Analysis of revenue by category
Sale of goods	235	278
Revenue from services	53,919	55,809
	54,154	56,087

4. FINANCE COSTS

	2013 £'000	2012 (*Restated) £'000
Interest payable on bank loans and overdrafts	103	80
Other interest payable	17	17
Pension scheme finance costs	468	237
Total finance costs for continuing operations	588	334
Bank interest receivable	(4)	(1)
Total finance credit for continuing operations	(4)	(1)
Net finance costs for continuing operations	584	333

5. TAXATION

	2013 £'000	2012 (*Restated) £'000
Current tax
UK Corporation tax at 20.0% (2012: 24.5%)	237	177
Total current tax credit	237	177
Deferred tax
Origination and reversal of timing differences	(373)	(316)
Impact of change in the UK corporation tax rate	(215)	(247)
Total deferred tax charge	(588)	(563)
Tax charge on profit/(loss) on ordinary activities	(351)	(386)

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

	2013 £'000	2012 (*Restated) £'000
Profit on ordinary activities before tax	512	263
Profit on ordinary activities at standard rate of UK corporation tax of 20.0% (2012: 24.5%)	(102)	(64)
Effects of:
- income not subject to tax	-	73
- expenses not deductible for tax purposes	(259)	(148)
- tax losses for which no deferred tax asset has been previously recognised	225	-
Re-measurement of deferred tax asset due to changes in the UK corporation tax rate	(215)	(247)
Total tax charge	(351)	(386)

During the year, as a result of the change in the UK corporation tax rate, the opening deferred tax balances have been re-measured. Deferred tax assets recognised at 1 January 2013 which had been measured at 23% at 31 December 2012 have been re-measured using the enacted rate that applied at 31 December 2013 (21%).

6.DIVIDENDS

A dividend in respect of the year ended 31 December 2013 of 1p per share, amounting to a total dividend of £265,000, is to be proposed at the Annual General Meeting on 18 June 2014. These financial statements do not reflect this proposed dividend.

7. DISCONTINUED OPERATION

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

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

	31 December 2013 £'000	31 December 2012 £'000
Revenue	9	57
Employee benefit expenses	-	(584)
	9	(527)
Impairment credit	-	5
Other operating expenses	(38)	(267)
Operating loss	(29)	(789)
Finance costs	-	(19)
Loss from discontinued operations	(29)	(808)
Total comprehensive losses from discontinued operations	(29)	(808)

8. 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 2013 £'000	31 December 2012 (*Restated) £'000
Profit from continuing operations attributable to equity holders of the Company	241	685
Loss from discontinued operations attributable to equity holders of the Company	(29)	(768)
Profit / (loss) from total operations attributable to equity holders of the Company	212	(83)

	31 December 2013 Thousands	31 December 2012 Thousands
Weighted average number of ordinary shares in issue	25,889 466	25,091 245
Adjustment for share options
Weighted average number of ordinary shares for diluted earnings per share	26,355	25,336

	31 December 2013 Pence	31 December 2012 (*Restated) Pence
Basic earnings per share
Continuing operations	0.93	2.89
Discontinued operations	(0.11)	(3.22)
Total operations	0.82	(0.33)
Fully diluted earnings per share
Continuing operations	0.91	2.86
Discontinued operations	(0.11)	(3.19)
Total operations	0.80	(0.33)

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.

9. NOTES TO THE CASH FLOW STATEMENT

Cash generated from/(used in) operations

			Group		Company
2013	2012 (*Restated)	2013	2012 (*Restated)
£'000	£'000	£'000	£'000
Continuing operations Profit/(loss) for the year after tax		190	685	(473)	(319)
Adjustments for:
-	Taxation	351	386	(64)	75
-	Finance costs/(credit)	116	96	(100)	(64)
-	Depreciation	411	424	-	-
-	Amortisation of intangible assets	153	116	-	-
-	Profit on sale of property, plant and equipment	(42)	(11)	-	-
-	Foreign currency translation	102	(30)	-	-
-	(Decrease) / increase in provisions	(672)	362	-	-
-	Movement in share option charge	61	68	-	-
-	Movement in retirement benefit obligation	(365)	(566)	(62)	(229)
-	Decrease in non-current other receivables	(184)	588	-	-
Changes in working capital (excluding the effects of exchange differences on consolidation):
-	Decrease in inventories	1	-	-	-
-	(Increase) / decrease in trade and other receivables	(9)	550	(1,456)	(611)
-	Increase /(decrease) in trade and other payables	(121)	(746)	813	366
Cash (used in) / generated from continuing operations		(8)	1,922	(1,342)	(782)
Discontinued operations Loss for the year after tax		(29)	(808)	-	-
Adjustments for:
-	Finance costs	-	19	-	-
-	Depreciation	-	8	-	-
-	Loss on sale of property, plant and equipment	24	-	-	-
-	Foreign currency translation	1	1	-	-
Changes in working capital (excluding the effects of exchange differences on consolidation):
-	Decrease in trade and other receivables	28	5	-	-
-	(Decrease) / increase in trade and other payables	(371)	275	-	-
Cash used in discontinued operations		(347)	(500)	-	-
Cash (used in) / generated from operations		(355)	1,422	(1,342)	(782)

10. RECONCILIATION OF MOVEMENT IN NET DEBT

		As at 1 January 2013 £'000	Cash flow £'000	As at 31 December 2013 £'000
Cash and cash equivalents		1,314	433	1,747
Bank overdrafts		(2,852)	(1,025)	(3,877)
		(1,538)	(592)	(2,130)
Invoice finance		(588)	(18)	(606)
Net debt		(2,126)	(610)	(2,736)

Financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 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 2013 Annual Report and Accounts will be posted to shareholders in early May.  Further copies may be obtained by contacting the Company Secretary at the registered office.  Alternatively, the 2013 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 18 June 2014 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 and care 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 and retail 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 and retail 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

www.pinderpack.com

Stock & Inventory Systems & Services

Orridge

Europe's longest established stocktaking business specialising in all fields of retail stocktaking including high street, warehousing and factory. It also has a specialised pharmacy division providing valuation and stocktaking services. A full range of stocktaking and inventory management solutions is provided for a wide range of clients in the UK and Europe.

www.orridge.co.uk

Venners

The leading supplier of stocktaking, inventory, consultancy services and related stock management systems to the hospitality sector. Consultancy services include control audits, 'live' event stocktaking and Health & Safety implementation and control. Bespoke software and systems enable real-time management reporting to customers using the best available technologies.

www.venners.com

Vennersys

Vennersys operates in the UK and North America and delivers turnkey EPoS and ticketing systems to visitor attractions such as historic houses and estates, museums, zoos, safari parks, aquaria and cinemas.

www.vennersys.com

This information is provided by RNS

The company news service from the London Stock Exchange

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