19 April 2021

Christie Group plc
Preliminary results for the 12 months ended 31 December 2020

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 audited preliminary results for the 12 months ended 31 December 2020.

Key points:

·      Revenue of £42.2m (2019: £78.0m) impacted by the pandemic

·      Operating profit pre exceptionals for the 2^nd HY £1.1m

·      Operating loss for the full year pre exceptionals contained to £4.4m loss (2019: £5.8m profit)

·     Sectorisation of Christie & Co - more flexibility, efficiency and lower cost base going forward

·      All our sectors remain in demand and pricing of businesses is robust

·      Retail stocktaking restructured

·      Prudently foregone a final dividend (2019 total dividend: 1.25p per share)

·      Ended year with a healthy cash balance of £10.3m (2019: £9.8m)

·      Earnings per share (19.32p) - 2019: 15.30p

·      2021 has started positively and look forward to remainder of year with enthusiasm

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

"2020 Group performance was impacted by the pandemic especially in the 1^st half year; however, we have already experienced a recovery in performance in the 2^nd half year. The business reorganisations taken by the Group during this period, have created the ability to generate higher levels of profitability. 2021 has started positively in the PFS division and Retail stocktaking businesses, and as our Hospitality stocktaking & visitor attractions businesses reopen we shall be firing on all cylinders." 

Enquiries:

Notes to Editors:

Christie Group plc (CTG.L), quoted on AIM, is a leading professional business services group with 40 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 under the Market Abuse Regulation (EU) No. 596/2014.

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

CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW OF THE YEAR

Review of 2020 results and performance

Following an unprecedented first half to the year, we are pleased to report the return to operating profit in the second half of the year. Our operating loss before restructuring costs for the year was contained to £4.4m (2019: £5.8m operating profit) derived from decimated revenue of £42.2m (2019: £78.0m). We have risen from an extraordinary year with transformed businesses, tight-knit focused teams and a renewed sense of purpose.

Despite the considerable adverse financial impact and ongoing effect of the Covid-19 pandemic, 2020 was a positive year for Christie Group as we proved our resilience, adaptability and the value of the roles we undertake for our clients across all our businesses.

We experienced an encouraging first quarter, boosted by the certainty of a decisive general election result. However, the pandemic's arrival meant that business effectively stalled for three months, with our physical offices closed and systems and people adapting to the demands of remote working to the extent required.

Professional & Financial Services

Our Professional & Financial Services ("PFS") Division achieved revenue of £26.3m (2019: £46.0m). Despite a reduction in revenue of £19.7m, through prompt and decisive action we limited the derived operating loss to £1.9m, compared to an operating profit of £6.2m in the prior year.

The outstanding attitude of our people drove a broadly positive performance across the PFS division. For example, Christie & Co, our business intelligence, valuation and consultancy firm, following sectorisation focused more effectively than ever on clients' key priorities, enabling it to make efficiency gains and achieve better margins. Our brilliant Childcare & Education team won the 'Broker - of Educational Institutions' award at the Education Investor awards 2020. Our Christie Insurance brokerage successfully placed business in a historically challenging market, winning new business while also achieving its budgeted client-retention figures.

An encouraging first quarter was progressively curtailed by Covid-19. Our last major pre-Covid event was the successful Healthcare Design Awards held on 11^th March run by Pinders, our business appraisal practice.

Our continuing teams assumed the transactions and assignments of their furloughed colleagues. With their on-site management duties largely in abeyance we enjoyed a period of great productivity.

Our agency business adopted a sector focus. This proved the sectorised model with which we reorganised the business.

The continued stamp duty holiday should ensure a vibrant residential market releasing capital for first-time business buyers.

Our FCA-authorised Christie Finance operation saw increased demand for the services of all its divisions, benefiting from its positive relationships with a very wide array of niche lenders at a time of reduced appetite from the big banks. In addition, the availability of the UK government's Coronavirus Business Interruption Loan Scheme ("CBILS") and bounce-back loans effectively created a new marketplace for the firm which was busily engaged throughout arranging loans predominantly through challenger banks.

Pinders, our specialist business appraisal, valuation and consultancy company, continued to build a solid platform for growth, ending 2020 with a stronger new business pipeline than the previous year.

Our territories in Europe were the most affected by the pandemic in view of their focus on the hotel industry. Hotels coming to the market are now generating strong interest, where appropriately priced. As recently announced, Christie & Co have been ranked as the most active agent in the hotel sector across Europe for 2020 based on the number of hotels sold, according to Real Capital Analytics.

Stock & Inventory Systems & Services

Our Stock & Inventory Systems & Services ("SISS") division achieved revenue of £16.0m for 2020 (2019: £32.1m). Taking into consideration, our constrained trading periods, we showed a marked improvement to the rate of loss, when the trading result is compared on a pro rata basis to the prior year.

There were encouraging developments for our SISS division too. The services of our Venners hospitality stocktaking business, for example, were in considerable demand prior to lockdowns, as business success and even survival for many players depends on understanding stock levels and eliminating waste.

With our Retail stocktaking business closed in the UK, we took the opportunity to plan a new start. We focused upon developing tight-knit teams, with flexible but client-focused skills and efficiencies. These teams comprised a smaller number of empowered cross-function management.

From January 2021 we are seeing the benefit of our new approach with increased efficiency and high accuracy of counts. The extension of flexible furlough has given us the ability to recall stocktakers into operations in line with our hospitality clients' resumption of trade.

Vennersys, meanwhile, continued to prove it is positioned at the forefront of providing advanced online ticketing solutions for the UK leisure industry. Additionally, demand grew for Orridge's retail, pharmacy and supply-chain stocktaking services in the UK and Europe. You can read in more detail about the performance of our subsidiaries elsewhere in this report.

The Government's culture grant to museums and heritage attractions was augmented in the recent Budget. This funding is enabling new Vennersys SAAS clients to open in a Covid-19-secure manner through joining our online timed ticketing facility.

The advent of Brexit has made no discernible impact to our businesses performance to date.

The impact of Covid-19

Despite such reasons for encouragement, we cannot ignore the fact that our business environment overall was extremely challenging during the year, and our revenues for the first half of the year were only approximately half of those we generated in 2019. We therefore undertook a number of actions to minimise the long-term impact on our business. These are set out in our Finance Director's review. For example, as previously reported we availed ourselves of a £6 million loan from the CLBILS.

In addition, we took action across the organisation to reduce our running costs and reduced permanent employee numbers by 7.5%, in line with our new ways of working. I am also extremely grateful to our staff and directors who willingly accepted a reduction in their remuneration while trading was either stalled or interrupted. I must also thank and congratulate our many colleagues who during this difficult time continued to support their communities, often through charitable activities. We continue to admire, encourage and support their selfless endeavours.

While at the time of writing we have been blessed in that none of our employees have succumbed to the virus, many of us have lost friends and relations during the pandemic. Several of our clients have lost colleagues and other loved ones, as have many of the businesses with which we partner to deliver our services. Our thoughts and condolences are with all those affected.

None of the year's achievements would have been possible without the ongoing diligence, energy and commitment of our extremely hard-working management and staff. Their performance was exemplary throughout the year, and I am enormously grateful to each and every one of them.

We saw some significant changes at the trading entity Board level during the year. My congratulations go to Scott Hulme, who was appointed to the role of Venners Managing Director. Likewise, congratulations are deservedly due to Darren Flack, who has been appointed as Managing Director of Orridge UK Retail and Pharmacy. I am pleased to announce that Mr Simon Herrick will be joining the Group Board as a Non-executive Director from the 1 May 2021. Simon brings with him a wealth of experience in multinational FMCG, property, consultancy, food, software, manufacturing and retail sectors.

Strategy

During the year we continued our strategic objectives. We accelerated our application of technology & used lockdown periods to test solutions that best require systems shut down. Our reorganisations reflected our strategic objective to increase operating margins as revenue rebuilds.

Outlook

We have come into the year with a strong cash position, having already repaid £1.0m of our CLBILS facility.

Your directors have prudently opted not to propose a dividend for 2020. It is our intention to reconsider dividend payments once supported by more normalised trading.

Following business reorganisations in 2020 we have created the ability to generate higher levels of profitability from the levels of revenue previously achieved. The year has started positively for our Professional and Financial Services and Retail stocktaking businesses. As these activities are joined by hospitality stocktaking and visitor attractions are reopened we shall be firing on all cylinders. After allowing for inevitable lead time and lags associated with sector reopening, for each quarter that our Group is permitted to trade unimpeded we expect to do so profitably.

David Rugg
Chairman and Chief Executive
16 April 2021

CHIEF OPERATING OFFICER'S REVIEW

The prevailing theme when looking back at 2020, across both our PFS and SISS divisions, is of a year where the scale of what we were able to offer was significantly disrupted by the pandemic, but the flexibility, value and quality of our services when provided were undiminished, if not enhanced.

While the headline financial results for the year - and particularly the fall in revenue compared to 2019 - illustrate the impact of that reduction in activity, within that - for those periods where each of our businesses and the sectors they serve were able to trade - there was much to be encouraged by. We saw enough from each of our businesses during a profitable second half of the year for the Group as a whole, to be confident that all of our trading brands can be profitable contributors to the Group in future.

Professional & Financial Services Division

Our agency and advisory business, Christie & Co, remained active across all of its sectors throughout the year, and continued to serve clients in both the UK and internationally from its European network.

While brokerage activity in terms of the number of businesses sold in the year was 45% lower than achieved a year earlier, average commissions received held up well. Indeed, the average fee per business sold was up 29% on a year earlier, although it should be noted this was partly a reversal of the mix of types of businesses sold which last year explained a 21% fall. A comparison across a slightly longer period of reflection shows average brokerage fees per business sold were at a level broadly consistent with 2018 and 2017.

There were several notable transactions across our sectors. In Hotels, highlights included the sale of the Grade II-listed Warren House in Surrey to Sun Hotel Limited, with Christie & Co acting for the private vendors as well as advising Peel Hotels on their sale of The Cosmopolitan Hotel in Leeds to the newly-formed Belfont Hotels. Internationally the second half brought more success than a very subdued H1, with the sale of the Schlosshotel Klink in Germany reflective of a more active summer.

In Care, where once again Christie & Co was the most active broker in the UK, we successfully supported the retiring directors of Waverley Care Centre Limited in their sale of the leading South Wales care home to Bellavista Care Homes in one of the largest single-asset care home transactions in Wales.

Our Medical teams were busy throughout the year in both the Dental and Pharmacy markets. In the latter, we continued to support Boots and Rowlands on their respective multi-site disposal projects while also seeing a 17% increase in independent pharmacy instructions. In the former, it was a year where brokerage activity gathered momentum, with the value of offers received in the second half of 2020 being a 300% increase on that received in the first six months.

Our award-winning Childcare & Education team were somewhat stopped in their tracks by the impact of Covid on the sector after an initially buoyant level of activity at the beginning of the year. Values in the sector have nonetheless held up and activity began to pick up again from Easter. Highlights in a very challenging year included  the sale of Heathfield Knoll School to KSI Education, and the sale of Futurepath Childcare to Grandir UK, the expanding French childcare operator.

Our Retail team were able to support a buoyant level of demand for convenience stores and forecourts. Our appointment by Bestway Retail Ltd to market 37 stores across the UK illustrated our standing in the sector.

For the pub sector, we saw very little in the year in terms of large-scale portfolio transactions, although the volume of single-asset transactions rose, partly as a reflection of first-time buyer appetite.

For Pinders, their decentralised national team of business appraisers were already 'Covid ready' in their working practices. They were therefore very quickly able to transition to undertaking inspections in a Covid-secure manner.

Nonetheless, the first lockdown brought a sharp decline in new instructions for a short period. The subsequent recovery in activity levels represented an almost-symmetrical reversal of the second-quarter decline, so that by the end of the year weekly activity levels and volumes were back to levels comparable with the last quarter of 2019. Indeed, in the final month of 2020, the number of valuation reports issued was actually 14% higher than the same period a year before, boding well for 2021 demand.

With Christie & Co's own valuation teams experiencing a similar trend in the year, the number of valuations carried out in the division for the year as a whole fell to 42% of the previous year's volume. Despite this, fee levels held up well with a small increase in the average fee per valuation, reversing an almost equivalent fall seen in 2019.

Within the PFS division, our financial services businesses, Christie Finance and Christie Insurance, were well placed to support clients throughout the pandemic with little or no disruption to their services. As owners and operators sought ways to access both traditional funding and the attractively-priced government funding schemes, Christie Finance were expertly positioned to support clients in securing it for them.

A 2% increase in the number of loan offers secured illustrates that borrower demand remained strong throughout the year, despite the disruption to the level of transactionally-led referral volumes that would normally come across from Christie & Co's agency teams. Indeed, Christie Finance experienced increased demand in its Core, Corporate and Unsecured divisions as businesses were able to access commercial mortgages through CBILS.

For our insurance intermediary business, securing new business was challenging in sectors where, due to the impacts of Covid and insurers' own caution regarding their own business interruption liabilities, appetite for taking on new client risk among underwriters was severely limited, particularly in the Care sector.

Nonetheless, Christie Insurance were able to support clients across our chosen sectors in understanding the insurance market as it applied to them. As the ability to shift insurers became more challenging, premiums hardened and retention rates improved.

Stock & Inventory Systems & Services Division

The impact on our ability to carry out stocktakes during the year as lockdown restrictions were applied to the retail and hospitality sectors in particular, is starkly illustrated by the fact that we were only able to complete 57% of the volume of jobs we achieved in 2019.  Our hospitality stock audit business, Venners, bore the heaviest burden in that regard, with only 48% of the previous year's volume of work possible.

Covid-secure operating requirements dictated that where it was possible to carry out stocktaking, it was necessary to undertake smaller assignments with reduced team sizes to limit people interactions. That dynamic is reflected by a 12.5% fall in the average income we earned per job, but the productivity improvements achieved in Orridge in the UK meant that the profitability per job was increased, despite the lower per-event income.

Positively - and demonstrating the value that independent stocktaking has to our clients - we saw demand return quickly when allowed. For Orridge, trading in both the UK and Europe was encouraging through much of the second half of 2020, before the onset of winter lockdowns and traditional seasonal demand effects in the UK combined to curtail activity in the final few weeks of the year.

For the traditionally-profitable Venners, from a complete lockdown through April and May we then saw revenues recover steadily through the third quarter to levels which, while still significantly lower than normalised pre-Covid invoicing, were sufficient for the business to return to trading profitably in the month of September.

No sooner had we reached this point of recovery, it was then immediately followed by the introduction of tier-based restrictions on hospitality in October before the further national lockdowns that followed thereafter, and which have remained in place throughout the first quarter of 2021.

Nonetheless, this demonstrated how swiftly the business can expect to scale back up and return to profit. We have retained a nationwide team of over 150 BII-accredited licensed-trade stocktakers who will be key to our future success and we have been grateful for their support and endurance through an exceptionally difficult period for the hospitality sector.

Despite these frustrations, Venners were still able to secure new business with a number of clients including Alton Towers Group, the Savini Group and HF Holidays, all of which we look forward to working with when restrictions come to an end.

For Vennersys, our visitor attraction software provider, it was a not-dissimilar story of continued progress offset by the frustration of our clients being unable to trade for large periods of the year.

Working from home presented no obstacles to the business in itself, with staff and management able to transition quickly to remote - but still collegiate and creative - working.

For the summer months of 2020, attractions saw strong consumer demand return, particularly for those who were able to offer outdoor experiences and events, and Vennersys's own revenues and performance were strong through that period as a result, as pre-booked ticketing became a 'must-have' even for many of those clients who had previously opted for more reduced functionality alongside their traditional ticketing processes.

Cross-selling initiatives have also gathered pace. Vennersys has worked collaboratively with other group companies, such as Christie Finance, enabling them to help their clients to access funding to support their own investment plans.

Against this backdrop, growth continued. By the end of 2020, the total number of sites using VenPos Cloud had increased by 31% compared to a year earlier, and total new sales orders confirmed in the year equated to 33% of 2019 revenues.

Summary

I wrote in early September when we released the then-delayed 2019 results, the events of 2020 have certainly not curtailed our optimism or belief in what can be achieved by the Group in the years ahead. 'Unprecedented' is a word which has been as overused in the last twelve months as any, but our businesses and brands have showed themselves to be resilient to the task.

If anything, 2020 has allowed us to review our operating models and enhance efficiency and productivity where it was appropriate to do so, while also re-confirming that the range of services we offer our clients - underpinned by sector specialist knowledge and with client relationships at the very heart of what we do - are as valuable to them as they have ever been.

We look forward to the remainder of 2021 with enthusiasm.

Dan Prickett

Chief Operating Officer

16 April 2021

Consolidated Income Statement
For the year ended 31 December 2020

All amounts derive from continuing activities.

The accompanying notes are an integral part of these preliminary results.

 Consolidated Statement of Comprehensive Income

 For the year ended 31 December 2020

 Total comprehensive (losses)/income attributable to:

 Consolidated Statement of Changes in Shareholders' Equity

 As at 31 December 2020

  Consolidated Statement of Financial Position

  At 31 December 2020

 Consolidated Statement of Cash Flows

 For the year ended 31 December 2020

The accompanying notes are an integral part of these preliminary results.

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1.    BASIS OF PREPARATION

The financial information set out in this announcement does not comprise the Company's statutory accounts for the years ended 31 December 2020 or 31 December 2019.  

The financial information has been extracted from the statutory accounts of the Company for the years ended 31 December 2020 and 31 December 2019. The auditors reported on those accounts; their reports were unqualified.

The statutory accounts for the year ended 31 December 2019 have been delivered to the Registrar of Companies, whereas those for the year ended 31 December 2020 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

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 June 2021.

These policies have been consistently applied to all years presented, unless otherwise stated. 

2.    SEGMENT INFORMATION

The Group is organised into two main operating segments:  Professional & Financial Services (PFS) and Stock & Inventory Systems & Services (SISS).

The segment results for the year ended 31 December 2020 are as follows:

The segment results for the year ended 31 December 2019 are as follows:

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

3.   OTHER INCOME - GOVERNMENT GRANTS

The Group has benefited from the Government support due to the Covid-19 business disruption, utilising the furlough scheme from its commencement which has provided financial assistance towards employee salaries in 2020. During 2020, £8,182,000 (2019: £nil) Government grants have been recognised in the Consolidated Income Statement, under the category Other income - government grants.

4.   RESTRUCTURING COSTS

During the year, the Group incurred restructuring costs of £672,000, including £628,000 of employee related termination costs.

5.    DIVIDENDS

A dividend in respect of the year ended 31 December 2020 of 0.00p per share (2019: 0.00p), amounting to a total dividend of £nil (2019: £nil) is to be proposed at the Annual General Meeting on 16 June 2021.

In the year the Group paid an interim dividend of 0.00p per share (2019: 1.25p) totalling £nil (2019: £326,000).

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 year, which excludes the shares held in the Employee Share Ownership Plan (ESOP) trust.

7.    NOTES TO THE CASH FLOW STATEMENT

Cash generated from operations

Report and Accounts

Copies of the 2020 Annual Report and Accounts will be posted to shareholders in May.  Further copies may be obtained by contacting the Company Secretary at the registered office.  Alternatively, the 2020 Annual Report and Accounts will be available to download from the investors section on the Company's website www.christiegroup.com 

Key dates

The Annual General Meeting of the Company is scheduled to take place at 10.00am on Wednesday 16^th June 2021 as a closed virtual meeting.  

Group Companies

Professional & Financial Services

Christie & Co

Christie & Co is the leading specialist firm providing business intelligence in the hospitality, leisure, healthcare, medical, childcare & education and retail sectors. A leader in its specialist markets, it employs the largest team of sector experts in the UK & Europe providing professional agency, valuation and consultancy services.

www.christie.com 

Christie Finance

Christie Finance has 40 years' experience in financing businesses in the hospitality, leisure, healthcare, medical, childcare & education, retail and medical sectors. Christie Finance prides itself on its speed of response to client opportunities and its strong relationships with finance providers.

www.christiefinance.com

Christie Insurance

Christie Insurance has over 40 years' experience arranging business insurance in the hospitality, leisure, healthcare, medical, childcare & education and retail sectors. It delivers and exceeds clients' expectations in terms of the cost of their insurance and the breadth of its cover.

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. Pinders staff use business analysis and surveying skills to look at the detail of the businesses to arrive at accurate assessments of their trading potential and value.

www.pinders.co.uk

Stock & Inventory Systems & Services

Orridge

Orridge is Europe's longest established stocktaking business specialising in all fields of retail stocktaking including high street, warehousing and factory operations, pharmacy and supply chain services. It also has a specialised pharmacy division providing valuation and stocktaking services. Orridge prides itself in its ability to deliver high-quality management information to its clients effectively and conveniently.

www.orridge.eu

Venners
Venners is the leading supplier of stocktaking, inventory, consultancy and compliance services and related stock management systems to the hospitality sector. Consultancy and compliance services include control audits and live event stock taking. Bespoke software and systems enable real-time management reporting to customers using the best available technologies. Venners is the largest and longest established stock audit company in the sector in the UK.

www.venners.com

Vennersys
Vennersys operates in the UK and deliveries online Cloud-based ticketing sales and admission Systems to visitor attractions such as historic houses and estates, museums, zoos, safari parks, aquaria and cinemas. It has over 25 years' experience delivering purpose-designed solutions for clients' ticketing, admissions, EPoS and food and beverages sales requirements.

www.vennersys.co.uk