TIDMCAE
RNS Number : 2408Q
Charteris PLC
07 April 2009
CAE
Charteris plc
("Charteris" or the "Company")
Interim Report
for the six months ended 31 January 2009
Charteris, the business and IT consultancy, announces its interim results for
the six months to 31 January 2009.
KEY POINTS
* Revenue of GBP11.6m (2008: GBP11.2m)
* Profit before taxation and exceptional charges was GBP353k (2008: GBP664k)
* Diluted EPS before share-based payments of 0.07p (2008: 1.15p)
* Cash balance at GBP1.7m (31 January 2008: GBP1.7m)
* Acquisition of SIG Consulting Limited in September 2008.
Commenting on the results Cliff Preddy, Chairman, said:
"The recession in the UK economy has continued to create difficult trading
conditions resulting in considerably lower performance of the business in the
period compared with last year. Our pipeline of future sales remains encouraging
although the current economic climate has led to delays in the award of new
contracts. In the short term, we are concentrating on ensuring profitable
trading, keeping costs aligned to near-to-medium term revenue projections. With
well differentiated service offerings targeted at diversified vertical markets
which we believe offer good potential for reliable long-term earnings, we remain
well placed to pursue new growth opportunities when conditions eventually
improve."
+-----------------------------------------+--------------------------+
| Press enquiries: |
+--------------------------------------------------------------------+
| David Pickering/Patrick Carter, | Tel: 020 7600 9199 |
| Charteris plc | |
+-----------------------------------------+--------------------------+
| Zoe Biddick, Biddicks | Tel: 020 7448 1000 |
+-----------------------------------------+--------------------------+
| Michael Shaw/Emma Ormond, Oriel | Tel: 020 7710 7600 |
| Securities Limited (Nominated Adviser) | |
+-----------------------------------------+--------------------------+
Charteris plc Interim Report 2009
The recession in the UK economy resulted in difficult trading conditions for
Charteris in the six months ended 31 January 2009 and current indications are
that this situation will continue through the second half. When announcing
excellent growth and strong results in early November 2008, for the financial
year ended 31 July 2008, we reported that the broad economic uncertainty had
started to lead to delays in the award of new contracts and extensions. This
trend persisted throughout the first half, resulting in considerably lower
underlying profit, compared to the equivalent period in the previous financial
year. In view of the market conditions, during the first half, action was taken
to align costs with the near-to-medium term business projections.
Financial Summary
Like-for-like revenue declined by 6% to GBP10.5m (2008: GBP11.2m) which was more
than offset by revenues contributed from our recent acquisition, SIG Consulting
Limited ("SIG"). Overall revenue increased by 3% to GBP11.6m.
Profit before taxation, share-based payments and exceptional costs associated
with a cost reduction programme was GBP353k (2008: GBP664k). Profit before
taxation was GBP16k (2008: GBP638k).
Fully diluted EPS was 0.03p (2008: 1.09p) and 0.07p (2008: 1.15p) before
share-based payments.
The cash balance at 31 January 2009 was GBP1.7m (31 January 2008: GBP1.7m; 31
July 2008: GBP2.9m). To finance the acquisition of SIG, a loan for GBP2.5m was
drawn down in August 2008 on a 15 year term, secured against the London
headquarters of the Company by means of a mortgage. Net debt on 31 January 2009
was GBP0.6m (31 January 2008: Net cash GBP1.2m; 31 July 2008: net cash GBP2.5m).
Business Overview
Our strategy continues to be based on offering well differentiated and
competitive services in the market sectors judged to have the best potential for
long-term client relationships and reliable long-term earnings. Our specialised
service areas of Customer Centric Business Change, Charteris Business Solutions
and Advanced Microsoft Consulting continue to provide business opportunities in
the sectors we serve. For example:
* Demand for Customer Centric Business Change services has grown, particularly in
the public sector. Our citizen centricity framework approach has resulted in new
orders in local and regional government, whilst our organisational change and
programme management capabilities have led to growth in the secure government
sector.
* Charteris Business Solutions was strengthened considerably by the acquisition,
in September 2008, of SIG, a company specialising in ERP consultancy services.
The integration of this business within Charteris has gone well and it has
continued to secure new profitable business in the private sector.
* Our capability in Advanced Microsoft Consulting has been central to our business
in the on-line retail market where our solutions have transformed clients'
on-line trading performance.
Public Sector
Our presence in homeland security has continued to expand. We are working in key
advisory roles on some of the most significant and critical long-term change
programmes in this domain and see promising opportunities for both growth in
existing accounts and the development of new relationships across the sector.
Our Citizen Centric Business Change consultancy and operational performance
management advisory work continue to build within the local & regional
government market. For Wiltshire County Council we delivered a further
successful phase of a programme to improve services and reduce costs in the
Department for Community Services. Our citizen centricity framework also led to
our winning new business with Barking and Dagenham Council to conduct a
strategic review of its process for collecting council tax. This work identified
a number of enhancements that could be made to improve council tax yields and
reduce costs.
The drive for greater efficiencies and reduced operating costs in the public
sector continued to create demand for our Advanced Microsoft Consulting
services. In local government we applied virtualisation techniques to
consolidate IT provision at Perth and Kinross Council. The council forecasts
significant reductions in costs as well as reducing its carbon footprint as a
result. In health we worked on a major programme to implement a new integrated
desktop environment for NHS Greater Glasgow and Clyde which will combine
desktop, server and application virtualisation to enhance IT service delivery
and enable new working practices.
Demand for our expert witness services on legal disputes in the information
technology domain was lower during the period. However, we are having
discussions around a number of cases, some with the potential to become large
scale engagements.
Retail & Services
On-line retail continues to be an important area for Charteris. Our
relationship with one of Europe's leading specialist retailers, resulted in high
levels of activity during the first half, and particularly during the first
quarter. We are engaged as their e-commerce partner, and as programme managers,
supporting the continued development of their multi-channel retailing
capability. In carrying out these roles, we helped with the successful delivery
of a range of systems for both front and back office functions to support
Christmas 2008 trading in the UK and continental Europe, helping to generate a
75% growth in e-commerce sales.
During the period we secured new business with the Post Office to provide advice
and guidance on the development of a business case and strategy for the
development of its multi-channel retail business. The definition stage of our
customer centricity framework has formed the basis for this work within a
project that combines the use of our experience in customer management systems
and multi-channel retailing.
Another new client in the half was pensions services administrator, Xafinity.
Charteris is supporting Xafinity with the programme management and
implementation of a major change programme within the health sector.
We were engaged by Bodycote Testing Group, the recently disaggregated testing
division of Bodycote plc, to design and implement a new corporate web presence
to support the launch of the new business.
Business Solutions
The acquisition of SIG has enabled us to create a compelling proposition in the
UK ERP and CRM markets, based on the Microsoft Dynamics product set, allied to
proven business change skills.
We were awarded a major contract in the first half to provide an ERP solution
based on Microsoft Dynamics AX for ABN, a division of AB Agri. ABN is the
leading British manufacturer of pig and poultry compound feed. We are now in the
development phase of the project which will provide an integrated solution to
support the sales, purchasing, finance and manufacturing functions of the
organisation.
A long standing relationship with a home services supplier further strengthened
during the period. We enhanced the company's Dynamics AX solution to enable the
system to support its provision of services throughout the country.
Outlook
The Company's pipeline of future sales prospects continues to be encouraging.
However, clients are proceeding cautiously with business investments in the
current economic climate - with consequent extended decision timescales. In view
of this, and because of the seasonal nature of revenues from our retail sector
work, overall demand for our services is expected to be lower in the second half
of the financial year than in the first half. Accordingly, we continue to take
steps, as appropriate, to ensure that costs remain aligned with near-to-medium
term revenue projections.
The uncertain market conditions make projections less certain than would
normally be the case at this point in the business year. However, the Directors
currently expect the Company to be break even before exceptional costs in the
second half. Whilst the Company will benefit next financial year from cost
savings initiated this year, the Directors believe that there will be limited
opportunity for growth if current economic conditions continue.
Charteris continues to benefit from strong ongoing client relationships in
diversified vertical markets. The continued resilience, professionalism and
commitment of the Charteris team to delivering excellent service to these
clients through this difficult period are very much appreciated by the Company.
The combination of key account relationships, well-targeted service offerings
and the deep experience of our team remain the core strengths of the business.
Whilst in the short term we are concentrating our efforts on ensuring profitable
trading, these strengths mean that we will be ready to pursue new growth
opportunities as conditions eventually improve.
Cliff Preddy
7 April 2009
CONSOLIDATED INCOME STATEMENT
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | 6 mths ended | 6 mths ended | |
| | | 31 Jan 2009 (Unaudited) | 31 Jan 2008 (Unaudited) | Year ended |
| | | GBP000 | GBP000 | 31 Jul 2008 |
| | | | | (Audited) |
| | Notes | | | GBP000 |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
| Continuing operations | | | | |
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Revenue | | 11,610 | 11,246 | 23,423 |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | _____ | _____ | _____ |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Other external charges | | (2,923) | (1,863) | (4,116) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Staff costs | | (7,563) | (7,713) | (15,045) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Administrative expenses | | (1,089) | (1,030) | (2,946) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | ______ | ______ | ______ |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | (11,575) | (10,606) | (22,107) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Operating profit before exceptional items | | | | 1,356 |
| | | 372 | 666 | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Redundancy costs | | (320) | - | - |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Share-based payment charge | | (17) | (26) | (40) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Operating profit | 3 | 35 | 640 | 1,316 |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Finance income | | 33 | 18 | 68 |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Finance costs | | (52) | (20) | (35) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Profit before taxation and exceptional items | | | | 1,389 |
| | | 353 | 664 | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Redundancy costs | | (320) | - | - |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Share-based payment charge | | (17) | (26) | (40) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Profit before taxation | | | | 1,349 |
| | | 16 | 638 | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Taxation | | (5) | (187) | (443) |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | _____ | _____ | _____ |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Profit for the financial period attributable to shareholders of the parent company | | 11 | 451 | 906 |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | _____ | _____ | _____ |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Earnings per share | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Basic | 4 | 0.03p | 1.10p | 2.22p |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Diluted | 4 | 0.03p | 1.09p | 2.20p |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | 6 mths ended | 6 mths ended | 12 mths ended |
| | | 31 Jan 2009 (Unaudited) | 31 Jan 2008 (Unaudited) | 31 Jul 2008 |
| | | GBP000 | GBP000 | (Audited) |
| | | | | GBP000 |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Profit for the financial period | | 11 | 451 | 906 |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Deferred tax, being income recognised directly in equity | | 48 | 8 | 70 |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Total recognised income and expense for the period attributable to shareholders of the parent company | | 59 | 459 | 976 |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
| | | | | |
+-------------------------------------------------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
CONSOLIDATED BALANCE SHEET
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | 31 Jan 2009 (Unaudited) | 31 Jan 2008 (Unaudited) | 31 July 2008 |
| | | GBP000 | GBP000 | (Audited) |
| | | | | GBP000 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Non-current assets | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Goodwill | | 7,172 | 5,020 | 5,020 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Other intangible assets | | 23 | 56 | 43 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Property, plant and equipment | | 3,267 | 3,395 | 3,331 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Investments | | 1 | 1 | 1 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Deferred tax asset | | 56 | 71 | 60 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | 10,519 | 8,543 | 8,455 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Current assets | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Trade and other receivables | | 4,308 | 5,238 | 5,779 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Cash and cash equivalents | | 1,698 | 1,744 | 2,912 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | 6,006 | 6,982 | 8,691 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | ______ | ______ | ______ |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Total assets | | 16,525 | 15,525 | 17,146 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Current liabilities | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Trade and other payables | | (3,412) | (4,842) | (5,979) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Current tax liability | | (496) | (323) | (459) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Borrowings | | (73) | (196) | (201) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Provisions | | - | (11) | - |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | (3,981) | (5,372) | (6,639) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Total assets less current liabilities | | 12,544 | 10,153 | 10,507 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Non-current liabilities | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Borrowings | | (2,193) | (306) | (210) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Deferred tax liability | | (165) | (300) | (217) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Deferred consideration | | (200) | - | - |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Provisions | | (33) | (23) | (25) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | (2,591) | (629) | (452) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Net assets | | 9,953 | 9,524 | 10,055 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Equity | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Called up share capital | | 432 | 430 | 430 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Share premium account | | 2,568 | 2,544 | 2,544 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Merger reserve | | 3,573 | 3,573 | 3,573 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| ESOP reserve | | (194) | (194) | (194) |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Other reserve | | 26 | 26 | 26 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Retained earnings | | 3,548 | 3,145 | 3,676 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| Total equity attributable to shareholders of the parent company | | 9,953 | 9,524 | 10,055 |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
| | | | | |
+-----------------------------------------------------------------+----------------+-------------------------+-------------------------+----------------+
CONSOLIDATED CASH FLOW STATEMENT
+--------------------------------------+----+-------------+-------------+-----------+
| | | 6 mths | 6 mths | Year |
| | | ended | ended | ended |
| | | 31 Jan | 31 Jan | 31 Jul |
| | | 2009 | 2008 | 2008 |
| | | (Unaudited) | (Unaudited) | (Audited) |
| | | GBP000 | GBP000 | GBP000 |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Profit before taxation | | 16 | 638 | 1,349 |
+--------------------------------------+----+-------------+-------------+-----------+
| Adjustments for: | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Depreciation of property, | | 81 | 77 | 174 |
| plant and equipment | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Amortisation of intangible | | 19 | 22 | 56 |
| assets | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Share-based payments | | 17 | 26 | 40 |
+--------------------------------------+----+-------------+-------------+-----------+
| Net interest | | 18 | 2 | (33) |
| expense/(income) | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | ______ | ______ | ______ |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Operating cash flows before | | 151 | 765 | 1,586 |
| movements in working capital | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Decrease/(increase) in receivables | | 2,163 | (990) | (1,531) |
+--------------------------------------+----+-------------+-------------+-----------+
| (Decrease)/increase in payables | | (3,170) | 709 | 1,850 |
+--------------------------------------+----+-------------+-------------+-----------+
| Increase/(decrease) in provisions | | - | 4 | (5) |
+--------------------------------------+----+-------------+-------------+-----------+
| | | ______ | ______ | ______ |
+--------------------------------------+----+-------------+-------------+-----------+
| Cash (outflow)/inflow generated by | | (856) | 488 | 1,900 |
| operations | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Income taxes received/(paid) | | - | 9 | (120) |
+--------------------------------------+----+-------------+-------------+-----------+
| Interest paid | | (52) | (20) | (35) |
+--------------------------------------+----+-------------+-------------+-----------+
| | | ______ | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Net cash (outflow)/inflow from | | (908) | 477 | 1,745 |
| operating activities | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | ______ | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Investing activities | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Interest received | | 33 | 18 | 68 |
+--------------------------------------+----+-------------+-------------+-----------+
| Purchase of property, plant and | | (5) | (101) | (157) |
| equipment | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Acquisition of SIG Consulting | | (2,433) | - | - |
| Limited | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Cash acquired with acquisition | | 448 | - | - |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Cash used in investing activities | | (1,957) | (83) | (89) |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Financing activities | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Dividends paid | | | | |
| | | (204) | (203) | (203) |
+--------------------------------------+----+-------------+-------------+-----------+
| Drawdown of loan | | | | |
| | | 2,500 | - | - |
+--------------------------------------+----+-------------+-------------+-----------+
| Loan arrangement fees | | (35) | - | - |
+--------------------------------------+----+-------------+-------------+-----------+
| Repayment of borrowings | | (610) | (91) | (185) |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Net cash inflow/(outflow) from | | 1,651 | (294) | (388) |
| financing activities | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Net cash (decrease)/increase in cash | | (1,214) | 100 | 1,268 |
| and cash equivalents | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Cash and cash equivalents at the | | 2,912 | 1,644 | 1,644 |
| beginning of the period | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| Cash and cash equivalents at the end | | 1,698 | 1,744 | 2,912 |
| of the period | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
| | | | | |
+--------------------------------------+----+-------------+-------------+-----------+
Notes
1. ACCOUNTING POLICIES
The consolidated financial information contained in this interim report does not
constitute statutory financial statements. The interim results, which have not
been audited, have been prepared using accounting policies which are consistent
with International Financial Reporting Standards as adopted by the European
Union ("IFRS"). The IFRS financial statements for the year ended 31 July 2008
have been filed with the Registrar of Companies and received an unqualified
audit report which did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
Measurement convention
The financial information is prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair value: financial
assets classified as fair value through profit or loss or as available-for-sale.
Basis of consolidation
The purchase method of accounting has been used to account for the acquisition
of subsidiaries by the group. The costs of an acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to
the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at the acquisition date irrespective of the extent of any minority
interest.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
Principal activity
The principal activity of the group is to provide consultancy services which
help clients improve business performance and create new business opportunities
through the effective application of information technology. The directors
consider the Group only operates one primary segment reporting and all revenue
and profit is attributable to that segment.
2. RECONCILIATION OF CHANGES IN EQUITY
+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+
| | Share | Share | Merger | Other | Retained | ESOP | Total |
| | capital | premium | reserve | reserve | earnings | Reserve | equity |
| | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| 1 August | 430 | 2,544 | 3,573 | 26 | 2,863 | (194) | 9,242 |
| 2007 | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Profit | - | - | - | - | 451 | - | 451 |
| for the | | | | | | | |
| period | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Share-based | - | - | - | - | 26 | - | 26 |
| payment | | | | | | | |
| charge | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Dividends | - | - | - | - | (203) | - | (203) |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Deferred | - | - | - | - | 8 | - | 8 |
| tax | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| 31 | 430 | 2,544 | 3,573 | 26 | 3,145 | (194) | 9,524 |
| January | | | | | | | |
| 2008 | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Profit | - | - | - | - | 455 | - | 455 |
| for the | | | | | | | |
| period | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Share-based | - | - | - | - | 14 | - | 14 |
| payment | | | | | | | |
| charge | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Dividends | - | - | - | - | - | - | - |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Deferred | - | - | - | - | 62 | - | 62 |
| tax | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| 31 July | 430 | 2,544 | 3,573 | 26 | 3,676 | (194) | 10,055 |
| 2008 | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Profit | - | - | - | - | 11 | - | 11 |
| for the | | | | | | | |
| period | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Share-based | - | - | - | - | 17 | - | 17 |
| payment | | | | | | | |
| charge | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Dividends | - | - | - | - | (204) | - | (204) |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Deferred | - | - | - | - | 48 | - | 48 |
| tax | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Issue of | 2 | 24 | - | - | - | - | 26 |
| shares | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| 31 | 432 | 2,568 | 3,573 | 26 | 3,548 | (194) | 9,953 |
| January | | | | | | | |
| 2009 | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | ==== | ==== | ==== | ==== | ==== | ==== | ==== |
+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+-------+-----+
3. OPERATING PROFIT
Operating profit has been adversely impacted by the high level of associate
usage in Q1. In Operating profit before exceptional items this was offset by
staff cost reductions in the core business implemented over H1. From the date of
acquisition, SIG Consulting Limited contributed revenues of GBP1,098,000 and
operating profits of GBP115,000. Management intend to integrate SIG within its
core business over the next twelve months.
4. EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and
numbers of shares.
+----------+----------+----------+----------+----------+----------+----------+----------+
| | 6 mths ended 31 | 6 mths ended 31 | Year ended |
| | Jan 2009 | Jan 2008 | 31 Jul 2008 |
| | | | (Audited) |
| | (Unaudited) | (Unaudited) | |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Profit after tax | 28 | 477 | 946 |
| for the financial | | | |
| year before | | | |
| share-based payment | | | |
| charges | | | |
+---------------------+---------------------+---------------------+---------------------+
| Share-based payment | (17) | (26) | (40) |
| charges | | | |
+---------------------+---------------------+---------------------+---------------------+
| | | | |
+---------------------+---------------------+---------------------+---------------------+
| Profit after tax | 11 | 451 | 906 |
| for the financial | | | |
| year | | | |
+---------------------+---------------------+---------------------+---------------------+
| | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+
4. EARNINGS PER SHARE (contd)
The weighted average number of shares for the purposes of basic earnings per
share excludes those owned by the Group's employee benefit trust are:
+------------------------------+-------------+--+---------------+--+------------+
| | 6 mths | | 6 mths | | 12 mths |
| | ended 31 | | ended | | ended |
| | Jan 2009 | | 31 Jan | | 31 Jul |
| | (Unaudited) | | 2008 | | 2008 |
| | | | (Unaudited) | | (Audited) |
+------------------------------+-------------+--+---------------+--+------------+
| Weighted average number of | No. of | | No. of | | No. of |
| shares | shares | | shares | | shares |
| | '000 | | '000 | | '000 |
+------------------------------+-------------+--+---------------+--+------------+
| For basic earnings per share | 40,811 | | 40,697 | | 40,697 |
+------------------------------+-------------+--+---------------+--+------------+
| Dilutive effect of share | 744 | | 566 | | 569 |
| options | | | | | |
+------------------------------+-------------+--+---------------+--+------------+
| | | | | | |
+------------------------------+-------------+--+---------------+--+------------+
| For diluted earnings per | 41,555 | | 41,263 | | 41,266 |
| share | | | | | |
+------------------------------+-------------+--+---------------+--+------------+
| | | | | | |
+------------------------------+-------------+--+---------------+--+------------+
+-------------------------------+------------+--+------------+--+------------+
| Basic before share-based | 0.07p | | 1.17p | | 2.32p |
| payment charges | | | | | |
+-------------------------------+------------+--+------------+--+------------+
| Diluted before share-based | 0.07p | | 1.15p | | 2.29p |
| payment charges | | | | | |
+-------------------------------+------------+--+------------+--+------------+
5. ACQUISITIONS
On 22 September 2008, the Group acquired 100% of the share capital of SIG
Consulting Limited, a company specialising in ERP consultancy services, based in
Harpenden, UK.
Details of consideration, net assets acquired and goodwill are as follows:
+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| | Purchase | | |
| | consideration: | | |
+---------------------+---------------------+---------------------+---------------------+
| | - cash paid | | 2,307 |
+---------------------+---------------------+---------------------+---------------------+
| | - 160,000 equity | | 26 |
| | shares issued | | |
| | (based on share | | |
| | price at | | |
| | completion) | | |
+---------------------+---------------------+---------------------+---------------------+
| | - deferred | | 200 |
| | consideration (see | | |
| | below) | | |
+---------------------+---------------------+---------------------+---------------------+
| | - direct costs | | 126 |
| | relating to the | | |
| | acquisition | | |
+---------------------+---------------------+---------------------+---------------------+
| | | | ------- |
+---------------------+---------------------+---------------------+---------------------+
| | Total purchase | | 2,659 |
| | consideration | | |
+---------------------+---------------------+---------------------+---------------------+
| | Fair value of | | (507) |
| | assets acquired | | |
| | (see below) | | |
+---------------------+---------------------+---------------------+---------------------+
| | | | ------- |
+---------------------+---------------------+---------------------+---------------------+
| | Goodwill | | 2,152 |
+---------------------+---------------------+---------------------+---------------------+
| | | | ------- |
+----------+----------+----------+----------+----------+----------+----------+----------+
Deferred consideration comprises a performance related earn-out, deferred for
two years, with a maximum value of GBP200,000 payable by the issue of up to
400,000 new ordinary Charteris shares valued at GBP66,000 based on the share
price at completion, with the balance payable in cash.
The above goodwill is attributable to SIG's strong position and profitability in
trading in the niche ERP market for Microsoft Dynamics AX.
The assets and liabilities arising from the acquisition, provisionally
determined, are as follows:
+------+-----------------------------------------------+------------+------------+
| | | Fair value | Acquiree's |
| | | GBP'000 | carrying |
| | | | amount |
| | | | GBP'000 |
+------+-----------------------------------------------+------------+------------+
| | Cash and cash equivalents | 448 | 448 |
+------+-----------------------------------------------+------------+------------+
| | Property, plant and equipment | 12 | 12 |
+------+-----------------------------------------------+------------+------------+
| | Trade and other receivables | 686 | 686 |
+------+-----------------------------------------------+------------+------------+
| | Trade and other payables | (639) | (639) |
+------+-----------------------------------------------+------------+------------+
| | | ------- | ------- |
+------+-----------------------------------------------+------------+------------+
| | | 507 | 507 |
+------+-----------------------------------------------+------------+------------+
| | | ------- | ------- |
+------+-----------------------------------------------+------------+------------+
4. INTERIM FINANCIAL INFORMATION
The interim financial information was approved by the directors on 7 April 2009.
We expect to announce our full year results in November 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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