26 September 2022

Christie Group plc

Interim Results for the six months ended 30 June 2022

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, is pleased to announce its interim results for the six months ended 30 June 2022.

H1 2022 Highlights

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

"A pleasing 1st half year performance with both revenues and profitability increasing. We have strong demand for our services and continue to win notable assignments. Despite the economic clouds gathering, we anticipate a successful full year performance."

Enquiries:

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

Chairman and Chief Executive's review

I am pleased to report a 26% increase in operating profit for the period to £2.3m (H1 2021: £1.8m). We increased revenue by 18% to £33.7m (H1 2021: £28.6m). Earnings per share increased to 5.36p per share (H1 2021: 3.17p) an increase of 69% over the corresponding period on the prior year. During the period we repaid a further £1.0m of CLBILS loan.

Our pension liability has reduced by a further £1.0m. Of the outstanding amount, £5.5m relates to a provision under IFRIC 14. This concerns further contributions which could result in the overfunding of our defined benefit schemes. The Employers do not intend to make excess payments and solutions are being discussed with Trustees to avoid creating surplus funds which are locked in.

Recruitment, whilst challenging, has generally proved successful, although with vacancies filled later in the year than originally planned.

Professional & Financial Services Division.

The Division generated an 8% increase in revenue to £22.1m (H1 2021: £20.6m). Operating profit was progressively higher at £3.2m (H1 2022: £3.1m) with Q2 building on Q1.

We have enjoyed a strong period of demand for our transactional services, across each of the specialist industry sectors in which we operate. This despite the strong economic headwinds these operations face. Investors were undeterred by the increased level of interest rates. These have broadly been priced into market prices to date.

Christie & Co continues to dominate the hotel & leisure transactional market. Hospitality businesses offering accommodation have enjoyed buoyant levels of trade, as air travel disruption, increased fares and capacity limits have continued to boost domestic business.

Our international territories have contributed notable assignments. Over 50% of our Hotel Industry fees are now generated from outside the U.K. Our geographical reach is illustrated by our sales of; the Novotel Chartres, Mercure Hotels in Chamonix and Saint-Emilion, Welcome Hotel in Essen, Ulemiste Hotel in Tallin and AT Calle Victoria in Malaga.

In other sectors where Christie & Co is dominant, we sold The Hub group of 16 pharmacies, Eastleigh Care Group, Twinkles Nursery Group and CB Motors and acquired The Cock Inn Mugginton & Meynell Ingram Arms in Burton upon Trent for RedCat Pub Company.

Valuation assignments executed by Christie & Co included the revaluation of the Marston estate of 1,500 pubs and restaurants, for balance sheet purposes.

Our valuation practice, Pinders, is enjoying buoyant demand and is being suitably selective to ensure that turnaround times for assignments delivered reflect our service ethos.

Following the success of the sectorisation of our transactional and advisory teams in Christie & Co, Christie Finance has itself appointed lead roles for medical, healthcare, childcare & education, retail and hospitality lending.

Stock & Inventory Systems & Services

Revenue increased by 43% to £11.5m (H1 2021: £8.0m), with further recovery available. An operating loss for the period of £0.9m (H1 2021: £1.3m) was incurred. This was an improvement of £0.4m over the corresponding period last year. No furlough support was received during 2022 whereas H1 2021 included £2.0m of government support.

Our stocktaking businesses continue to increase prices to reflect their increased labour, energy and transport costs.

Our Leisure and Hospitality stocktaking business, Venners, is now trading profitably once more following the continued pandemic effects experienced at the start of the year. Client wins included Red Lion Holdings, BrewDog and Inglenook Inns & Taverns. In addition to stocktaking, we are conducting financial & brand audits including audits across the Boparan restaurant brands using our bespoke audit system.

Our Retail stocktaking business has recovered to the point that 3 out of 5 operations are now trading profitably. Margins are good and our objective is to increase revenue. Contract renewals included Waterstones and Wilko and new clients included Claires. Orridge added over 100 further pharmacy stocktakes for Jhoots Pharmacy, Living Care and matrix Pharmacy.

Our SaaS for visitor attraction business, Vennersys, is acknowledged as the most functionally rich suitable system for a wide range of venues including heritage properties, play centres & museums. Contract renewals included Blenheim Palace. Client's post pandemic online revenue has reduced as a proportion of sales, as 'walk ins', as distinct from advance bookings, are once more a feature of their trade. We have nonetheless continued to increase our total online revenue, from which we derive income.

Looking Ahead

We have received extensive interest in the Four Seasons Healthcare Group from a wide range of parties including real estate investors, corporate buyers, regional groups, and SME operators all of whom are looking for growth opportunities via acquisition. The first round bid process will conclude in early Autumn.

We enjoy strong transactional pipelines. Our international hotel transaction and consulting practice is robust.

Our SISS division, overall, has made significant progress, with further new client proposals outstanding.

Our staff have enjoyed and benefitted from their renewed in person team and company meetings. They are busy and proactive, and I thank them for their energy and ideas.

As we go to press, we are in a strong cash position.

On behalf of the board and colleagues, I record our heartfelt appreciation for the dedicated, loving and unstinting reign of H M Queen Elizabeth II. We welcome our Sovereign King Charles III.

An increased interim dividend of 1.25p per share (H1 2021: 1.0p) will be paid on 4 November 2022 to shareholders on the register on 7 October 2022.

Despite the economic clouds gathering, we anticipate a successful full year.

Stay warm!

David Rugg

Chairman and Chief Executive

Independent Review Report to Christie Group plc for half year ended 30 June 2022

We have been engaged by Christie Group PLC ("the Company") to review the financial information for the six months ended June 2022 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated statement of total recognised gains and losses, the consolidated cash flow statement and related notes 1 to 16. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board and our Engagement Letter dated 08 August 2022. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Respective responsibilities of directors and auditor

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting', and the AIM Rules issued by the London Stock Exchange, which requires that the interim report must be prepared and presented in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility is to express to the Company a conclusion on the consolidated financial information in the interim report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated financial information in the interim report does not give a true and fair view of the financial position of the Company as at 30 June 2022 and of its financial performance and its cash flows for the six months then ended, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting', and the AIM Rules issued by the London Stock Exchange.

Signed:

Mazars LLP

Chartered Accountants

The Pinnacle

160 Midsummer Boulevard

Milton Keynes

MK9 1FF

23 September 2022

Notes:

(a) The maintenance and integrity of the Christie Group PLC web site is the responsibility of the directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Consolidated interim income statement

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

Total comprehensive income for the period is wholly attributable to equity shareholders of the parent.

Consolidated interim statement of changes in shareholders' equity

Consolidated interim statement of financial position

Consolidated interim statement of cash flows

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 information in this report has been prepared using accounting policies consistent with United Kingdom adopted IFRS. The financial information has been prepared on the basis of IFRS that the Directors expect to be endorsed by the UKEB as at the date of approval of the 31 December 2022 accounts.

The interim financial statements have been prepared in accordance with IAS 34 and the accounting policies applied in the financial statements for the year ended 31 December 2021. Taxes on income in the interim periods are accrued using the effective tax rate that would be applicable to expected total annual earnings.

Going concern

Having reviewed the Group's budgets, projections and funding requirements to 31^st December 2023, and taking account of reasonable possible changes in trading performance over this period, particularly in light of Covid-19 risks and counter measures, the Directors believe they have reasonable grounds for stating that the Group has 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.

The forecasts for the combined Group projections, taking account of reasonably possible changes in trading performance, indicate that the Group has sufficient facilities and headroom to continue in operational existence to 31^st December 2023. As a consequence, the Board believes that the Group is well placed to manage its business risks, and longer-term strategic objectives.

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 2021 have been delivered to the Registrar of Companies. The auditors reported on these accounts reported the following:

The financial information for the periods ended 30 June 2022 and 30 June 2021 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 exceed 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 and the amount of variable consideration. 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 2022 are as follows:

The segment results for the period ended 30 June 2021 are as follows:

4. Segment information (continued)

The segment results for the year ended 31 December 2021 are as follows:

Revenue recognised in the period has been derived from the provision of services provided when the performance obligation has been satisfied.

5. Other income - government grants

The Group benefited from Government support due to the Covid-19 business disruption, utilising the furlough scheme from its commencement which has provided financial assistance towards employee salaries.  Government grants have been recognised in the Consolidated Interim Income Statement, under the category Other income - government grants.

6. 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.

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 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.

8. Dividends

A final dividend in respect of 2021 of 2.00p per share, amounting to a dividend of £520,000, was proposed by the directors and approved by the shareholders at the Annual General Meeting on 15 June 2022, with the funds paid to the registrar on 1 July 2022. The funds were transferred to shareholders on 8 July 2022.

An interim dividend in respect of 2022 of 1.25p per share, amounting to a dividend of £332,000, was declared by the directors at their meeting on 13 September 2022. These financial statements do not reflect this dividend payable.

The dividend of 1.25p per share will be payable to shareholders on the record on 7 October 2022. The dividend will be paid on 4 November 2022.

As at the 31 December 2021, the parent company had distributable reserves of £4,747,000.

9. Trade and other receivables

The fair value of trade and other receivables approximates to the carrying value as detailed above.

10. Share capital

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.

11. 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 2022 is calculated on a year-to-date basis, using the latest actuarial valuation as at 30 June 2022. 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 2022. However, significant market fluctuations have caused a change in the discount rate applied to the defined benefit obligation resulting in a decrease in the liability.

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 2022 after adjusting for the actual contributions to be paid in the period.

The obligation outstanding of £7,989,000 (30 June 2021: £14,997,000; 31 December 2021: £8,997,000) includes £1,100,000 (30 June 2021: £1,353,000; 31 December 2021: £1,312,000) 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.

On an IAS 19 accounting basis, the underlying deficit in the Group schemes at 30 June 2022 was £2.5m (30 June 2021 £15.0m, 31 December 2021 £7.2m).

The terms of the schemes are that the Group does not have an unconditional right to a refund of any surplus. During the period ended 30 June 2022, the Group recognised an adjustment to the IAS 19 accounting basis under IFRIC14 of £5.5m (30 June 2021 £nil, 31 December 2021 £1.8m), resulting in a deficit included in the consolidated interim financial position of £8.0m (30 June 2021 £15.0m, 31 December 2021 £9.0m), which represented the present value of future contributions under current funding plans.

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.

11. Retirement benefit obligations (continued)

The movement in the liability recognised in the statement of financial position is as follows:

The amounts recognised in the income statement and statement of comprehensive income are as follows:

The principal actuarial assumptions used were as follows:

Assumptions regarding future mortality experience were consistent with those disclosed in the financial statements for the year ended 31 December 2021.

12. Trade and other payables

13.  Note to the cash flow statement

Cash generated from operations

14. Cash and cash equivalents

The Group is operating within its existing banking facilities.

15. Related-party transactions

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

During the period rentals of £256,000 (30 June 2021: £242,000; 31 December 2021: £485,000) were payable to Carmelite Property Limited, a company incorporated in England and Wales, and jointly owned by The Christie Group Pension and Assurance Scheme, The Venners Retirement Benefit Fund and The Fitzroy Square Pension Fund, by Christie Group plc in accordance with the terms of a long-term lease agreement.

16. Publication of Interim Report

The 2022 Interim Financial Statements are available on the Company's website https://www.christiegroup.com