CTG Christie Group Plc

30 September 2024

Christie Group plc

Interim Results for the six months ended 30 June 2024

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 2024

H1 2024 Financial Headlines

·      Revenues increased by £2.2m (7%) to £35.3m (2023: £33.1m)

·      £0.8m improvement in H1 operating loss to £0.6m (2023: £1.4m loss)

·      Recovery in PFS revenues which increased by 10% to £22.3m (2023: £20.4m)

·      PFS division returns to modest H1 operating profit (2023: £0.4m loss)

·      SISS revenues up 2% to £13.0m (2023: £12.8m)

·      SISS operating loss significantly reduced by 38% to £0.6m loss (2023: £1.0m loss)

·      Both defined benefit pension schemes remain in surplus with no ongoing cash cost

·      Cash used in operations during the period was £1.1m (H1 2023: £1.8m). The Group continues to operate within its banking facilities with net overdraft facilities of £4.5m and an expectation of an improved cash position by the year end

·      The Board has maintained an interim dividend of 0.50p (H1 2023: 0.50p per share) reflecting its confidence in a stronger H2 and a profitable full year performance

H1 2024 Operational Headlines

·      Strong recovery in transactional brokerage activity in the UK, with 517 units sold in H1 (2023: 376)

·      UK performance offset by weak H1 trading in our international businesses, where transaction timings are significantly second-half weighted

·      38% growth in H1 incomes from our finance brokerage activities

·      16% growth in H1 revenues from our UK hospitality stock audit business

·      Progress has been made in reducing losses in our retail stocktaking operations, delivering a profitable H1 performance from our aggregated UK operations

·      Customer acquisition in our visitor attraction software business has been disappointing

Current trading and outlook

·      Transactional brokerage pipelines in the UK and Europe support expectations of a stronger second half performance, and the Group is on-track to deliver a recovery in FY24 transactional volumes to levels consistent with those achieved in 2021 and 2022

·      UK transactional pipelines were 24% higher at the end of H1 2024 than the same point in the previous year

·      Finance brokerage activity is also encouraging with positive levels of commercial mortgage and unsecured lending into our sectors

·      Demand for our hospitality stock audit services remains robust with encouraging levels of new business growth and sales conversion into our pub and hotel markets

Financial results for the six months ended 30 June 2024

Dan Prickett, Chief Executive, commented:

"Reporting a first-half operating loss is undoubtedly a disappointing outcome but masks progress being made across our Group. We have delivered a strong recovery in our UK transactional brokerage activity in H1 alongside positive growth performances in our finance brokerage business and our hospitality stock audit business.

Within our PFS division, we have absorbed the significant costs of investing in our international brokerage operations against second-half weighted income expectations, while also bearing the costs of our ongoing development of a resilient insurance brokerage business.

Within our SISS division, the Board is focused on eliminating losses from our retail stocktaking and visitor attraction software brands.

We anticipate a much stronger H2 result and a return to a profitable full year performance."

Enquiries:

Notes to Editors:

Christie Group plc (CTG.L), quoted on AIM, is a leading professional business services group with 37 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     

Chief Executive's review

As reported in our most recent trading update, the Group reported an operating loss in the first half but has made progress in a number of areas which have contributed to a reduction in the operating loss reported for the same period last year. While ongoing market volatility has reduced the Board's original expectations for the full year, we continue to anticipate a return to a profitable full-year performance.

Financial Review

The Group reported revenues of £35.3m (2023: £33.1m) and an operating loss of £0.6m (2023: operating loss £1.4m). The £0.8m reduction in H1 operating losses was attributable to improvements in performance across both the Professional and Financial Services ("PFS") division and the Stock & Inventory Systems and Services ("SISS") division, with the H1 performance in each improved by £0.4m year-on-year.

H1 revenue growth of 7% was primarily due to a recovery in transactional and finance brokerage income in the PFS division, where income rose by 10% to £22.3m (2023: £20.3m). In our SISS division, we grew revenues by a more modest 2% to £13.0m (2023: £12.8m).

Employee benefit expenses increased by 5% to £26.3m (2023: £25.2m). Having borne the impact of strong inflationary pay pressures and grown headcount in those areas where we see the opportunity to support increased income potential, lower inflationary pressures in 2024 and beyond will be welcome. Other operating expenses increased by only 2% from £9.4m to £9.5m.

Finance costs increased slightly to £0.6m (2023: £0.5m). We anticipate our cash balance improving in H2 as a result of the improved H2 trading outlook, and with reduced working capital funding requirements where H1 outflows include the payment of annual bonuses and commissions relating to the previous year. Both of our defined benefit pension schemes remain in surplus.

Notwithstanding the disappointment of reporting a first half operating loss, the Board's confidence of delivering a return to profit for the full year is recognised by its decision to declare an interim dividend of 0.5p per share (H1 2023: 0.5p per share) which will be paid on 8 November 2024 to shareholders on the register on 11 October 2024.

Professional and Financial Services Division

A 38% increase in the number of businesses sold in the UK in the period - 517 compared to 376 in H1 2023 - was a key driver in the division's revenue growth, but the strength of recovery in our UK agency business was offset by weak first-half revenues from our European agency and advisory offices. The strong volume recovery in our UK transactional income was counterbalanced by the mix of revenues being derived from lower-value sector streams. Our average fee per transaction reduced by 23% compared to 2023, but the composition of our pipelines for second-half activity - we have a higher H2 weighting towards sectors such as Healthcare, Childcare and Dental - mean that we expect to sustain at least the same level of transaction volumes in H2, but with average fees closer to H1 2023 levels.

Against this recovery in UK activity, we have borne the costs in the first half of seeking to create a stronger, broader and more resilient European network. With income for the year on the continent expected to be strongly second half-weighted, the impact on H1 operating profits in the division has been stark and has prevented the division from achieving the double-digit operating profit return on revenue that it would otherwise be capable of. The mainland continental performance in the period has served to offset otherwise encouraging performances from our UK agency teams and our finance brokerage operation. The latter saw H1 revenues grow by 38% compared to the prior year with revenues from our commercial mortgage, unsecured and real estate and bridging finance streams all contributing to that strong growth.

Our advisory teams have once again been busy throughout the period. We valued over £5.7bn of businesses during the period. This was a slight reduction on the £6.1bn we valued in H1 2023 as the first half ended with a short period of subdued activity in the run up to the UK General Election which took place on 4^th July.

We also continued to invest in developing our insurance brokerage business and have seen encouraging progress being made in the level of client retentions now being achieved, and an encouraging level of life and protection cover being secured, often for clients for which we have already secured commercial mortgage lending offers through our finance brokerage teams.

Stock & Inventory Systems & Services Division

In the SISS division, 16% income growth from our hospitality stock audit business was offset by lower revenues from our retail stocktaking operation and slower growth than desired from our visitor attraction software business.

We nonetheless managed to deliver a £0.4m reduction in first-half operating losses to £0.6m (2023: operating loss £1.0m). This was achieved by operating our retail stocktaking operation from a more efficient base following the actions taken in H2 2023 and benefitting from strong profit conversion of the income growth in our hospitality stock audit business. The main disappointment in our SISS operating performance in the first half was a weak level of new business wins achieved in our visitor attraction software business, where client buying decisions appear linked to increasingly elongated funding applications for government and local authority grants.

Outlook

The Group commenced the second half with encouraging pipelines for both the UK and our European businesses, with the UK transactional pipeline 24% higher than the same point than H1 2023. As a result, we are optimistic of stronger second half trading performance and anticipate returning to brokering the sale or purchase of over 1,000 businesses in the year. The outlook for our finance brokerage business in the second half is similarly positive.

In our SISS division we expect continued growth from our hospitality stock audit business, and further progress in the steps needed to reduce or eliminate losses from our retail stocktaking operation. Following the disappointing sales performance of our visitor attraction business in H1, we have already secured a number of wins in the early part of H2, but growth rate remains subdued.

I would like to thank our talented and dedicated teams who have worked with such commitment throughout the first half and their continued dedication during the remainder of this year to deliver positive outcomes for our clients.  We look forward to a positive outcome for the full year.

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 2024 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 2024 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 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

27 September 2024

MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)

Consolidated interim income statement

Earnings per share attributable to equity holders - pence

Loss 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 losses for the period are wholly attributable to equity shareholders of the parent.

Consolidated interim statement of changes in shareholders' equity

Consolidated interim statement of financial position