TIDMCAE
RNS Number : 3900X
Charteris PLC
06 December 2010
CHARTERIS PLC
("Charteris" or "the Company" or "the Group")
PRELIMINARY RESULTS
Charteris plc, the business and IT consultancy, announces its preliminary
results for the year ended 31 July 2010.
Key points
· Revenue of GBP15.4m (2009: GBP20.3m)
· Loss before taxation and exceptional charges was GBP840k (2009: GBP438k
profit)
· Diluted loss per share before exceptional charges of 2.03p (2009: 1.18p
earnings)
· Restructuring and cost saving measures implemented, reducing costs by 19%
year on year - a key factor in the Group's return to break-even performance
before exceptional costs in Q4
· Work for local authorities based on Citizen Centric Business Change model
developed significantly
· Microsoft Dynamics business performed strongly, particularly benefiting
from existing and new contracts in the manufacturing, distribution and
commercial sectors
Commenting on the results, Cliff Preddy, Chairman, said:
"The continuing effects of the recent recession in several of the consulting
markets in which we operate meant that trading conditions for Charteris were
challenging throughout the financial year ended 31 July 2010. Sales and
revenues improved progressively through the second half, leading to an
underlying break-even performance for the business in the last quarter before
exceptional costs.
Following the improving trend in the final quarter of FY10, performance in the
first quarter of FY11 has been encouraging with stronger utilisation of
professional staff and a building sales pipeline. The trend should give
progressive improvement in business performance from our lower cost base,
assuming that markets maintain reasonable resilience to any further economic
pressure."
+-------------------------------------------+------------------+
| |
| Press enquiries: |
| |
+--------------------------------------------------------------+
| Charteris plc | |
| David Pickering, Chief Executive | Tel: 020 7600 |
| Patrick Carter, Finance Director | 9199 |
| | |
+-------------------------------------------+------------------+
| Oriel Securities Limited (Nominated | |
| Adviser) | Tel: 020 7710 |
| Michael Shaw / Emma Griffin | 7600 |
+-------------------------------------------+------------------+
CHAIRMAN'S STATEMENT
The continuing effects of the recent recession in several of the consulting
markets in which we operate meant that trading conditions for Charteris were
challenging throughout the financial year ended 31 July 2010 (FY10). Efforts
were largely concentrated on achieving key sales, whilst adjusting and
constraining costs in line with forecasts for near and medium term revenue.
In the interim report for the year, released at the end of March, the Directors'
expectation was that the second half financial performance would show an
improvement on the first half but that overall business volumes were unlikely to
rise appreciably until the fourth quarter. This proved to be the case, and
whilst longer than expected client decision timescales meant slower improvement,
sales and revenues improved progressively through the second half, leading to an
underlying break-even performance for the business in the final quarter before
exceptional costs.
Results
Revenue in the year ended 31 July 2010 was GBP15.4m (2009: GBP20.3m).
Loss before taxation and exceptional items was GBP0.8m. (2009: profit GBP0.4m).
Exceptional charges consisted of redundancy costs of GBP0.2m (2009: redundancy
costs GBP0.6m; impairment of goodwill of GBP1.0m and share-based payment charge
of GBP0.04m). Loss before taxation was GBP1.0m (2009: GBP1.2m). Fully diluted
loss per share was 2.49p (2009: 2.85p loss).
The cash balance at 31 July 2010 was GBP0.9m (31 July 2009: GBP1.5m; 31 January
2010: GBP0.8m). Net debt on 31 July 2010 was GBP1.4m (31 July 2009: GBP0.7m).
Dividend
In order to conserve cash during less certain trading, the directors have
decided not to recommend an annual dividend (2009: 0.2p per share).
Business Overview
The Company's strategy is to concentrate on those activities that the Board
believes have the greatest potential for the building of long-term client
relationships, delivery of reliable margins and improvement of shareholder
value.
The chosen service specialisations, delivered in selected market sectors, are:
Business Change Consulting: change and transformation programmes driven by the
needs of our clients' customers and users of services (Customer Centric Business
Change), supported by deep experience in the Charteris professional team of
organisational change consultancy and major programme management. Business
consulting revenues in the Public Sector made a solid contribution over the
year. We continued to support a number of organisations engaged in homeland
security. Our work for local authorities based on our Citizen Centric Business
Change model developed significantly. In the Retail Sector, though overall
revenues were lower this year, towards the end of the period new business based
on Customer Centric Business Change was secured.
Microsoft Dynamics: maximising business efficiency, productivity and flexibility
through the design and implementation of Enterprise Resource Planning (ERP) and
Customer Relationship Management (CRM) business systems, based upon the
Microsoft Dynamics range of application software products. The Microsoft
Dynamics business performed strongly, particularly benefiting from existing and
new contracts in the manufacturing, distribution and commercial sectors.
Microsoft Technologies: the provision of Advanced Microsoft Consulting skills
for the design and implementation of IT systems and infrastructure based on
Microsoft's "classic stack" technology, and Cloud Computing. Revenues for
infrastructure services held up well during the year and, in the second half,
there was encouraging renewal of demand for our Advanced Microsoft Consulting
services in the financial services sector.
Outlook
Despite the challenges of the past year, the Company retains a clear direction
which will position the business for improved performance as market conditions
stabilise.
Charteris enters the new business year with a better balance of business across
our market sectors. Our three core service areas are well aligned to the needs
of clients operating in a cost constrained, yet competitive economic
environment. Whilst there is still likely to be a tendency for clients to
proceed cautiously in this environment, the need for timely business change is
increasing. Our track record in delivering reliable IT-enabled change and
carefully targeted services will progressively differentiate Charteris in this
evolving market.
Following the improving trend in the final quarter of FY10, performance in the
first quarter of FY11 has been encouraging with stronger utilisation of
professional staff and a building sales pipeline. The trend should give
progressive improvement in business performance from our lower cost base,
assuming that markets maintain reasonable resilience to any further economic
pressure.
The fundamentals of Charteris remain strong with a quality client base and a
high calibre team.
Cliff Preddy
Non-Executive Chairman
3 December 2010
CHIEF EXECUTIVE'S STATEMENT
In difficult trading conditions the imperative over the period has been to take
the steps necessary to ensure that the business is on course for recovery from
the effects of the recession. These steps have concentrated on maximising
effectiveness in the market positioning and sales of our services, as well as
further improving operational cost efficiency.
Although a number of our markets remained sluggish for much of the year,
concerted efforts in the promotion and targeting of our services have led to a
growing sales pipeline through the second half and an increased rate of sales
closures. Remaining highly client focussed has enabled us to build upon both
existing and new account relationships that have the potential to develop
considerably over the coming year.
We have taken the necessary actions to keep the Company's cost base aligned with
currently projected business volumes. In taking these steps we have preserved
the core strengths of the business, which will be vital to the anticipated
future growth of Charteris as market conditions improve.
Government & Legal
Our work in the Public Sector has been an important contributor to the business
throughout the year. In homeland security we continued to provide advisory and
programme management services to some of the most significant long-term change
programmes in this domain.
Over several years we have built a demonstrable track record in delivering
operational efficiency improvements in Local and Regional Government using our
Customer (Citizen) Centric Business Change (CCBC) techniques. Demand for this
proposition has increased in a market where tight budgetary constraints make
cost control with efficient service delivery the top priority.
Following our successful CCBC projects at Wiltshire Council - reducing cost
while improving services in Adult Social Care - we have successfully engaged in
a number of new projects for the council. Helping people to live longer at home
while maintaining sustainable budgets is a key focus of change. The CCBC
approach has also been used in other council service areas including Waste
Management, Highways, Amenities and Transport. These activities are leading to
close partnership working to meet the challenge of budgetary constraints while
protecting vital customer services.
Building on this success we have engaged in new projects to deliver similar
benefits to a number of new local authority clients during the period. These
include the South West Regional Improvement and Efficiency Partnership (RIEP), a
partnership of sixteen local authorities in the South West that supports those
authorities in delivering efficiency savings and in improving their ability to
provide services to their citizens. We have also worked with Plymouth CC,
Cornwall CC, Warrington CC, Worcestershire CC, Surrey CC and a number of other
local councils and Health Services.
The drive for greater efficiencies and reduced operating costs throughout the
public sector also continued to create demand for our Advanced Microsoft
Consulting services. This was also stimulated by Microsoft's wave of new
product releases in desktop, collaboration and communication technologies.
Towards the end of the period, the growth in clients' interest in 'Cloud' or
Software-as-a-Service solutions strengthened the pipeline of opportunity for our
combined skills in IT-enabled business change. Our work in this area included
consolidation of the corporate and education IT infrastructure at Perth and
Kinross Council and the implementation of a cloud based collaboration platform
for a public sector body in Scotland.
In the legal sector, during the year, our experts have again acted in some of
the highest profile IT cases before the English and Irish courts. The most
significant IT/legal event of the year was the handing down of the judgment in
Sky v. EDS, a landmark ruling in the Technology and Construction Court. A team
of Charteris experts acted for the defendants in the case. Charteris experts
also acted in two significant intellectual property cases and other cases in the
High Courts in London and Dublin. We have also provided expert mediators who
helped the parties resolve their disputes without resorting to litigation.
Retail & Services
On-line and multi-channel retail continues to be an important area for
Charteris. Through the year we worked with a number of major retailers, helping
them gain advantage from new multi-channel retail opportunities.
Prevailing economic conditions meant that the traditionally quieter period for
the supply of services to the Retail sector through the winter was strongly
pronounced this year - leading to lower revenues in this business area through
the second and third quarters.
Our experience in multi-channel retail led in Q4 to Charteris being selected as
an IT services partner by a leading high street retailer. This has resulted in
the initiation of several new projects in the online retailing area over recent
months. Also during the second half we were appointed to apply our retail and
change management skills in the strategic review of the online operations of a
value retailer. The result was a three-year roadmap for change in support of
their e-Business growth plans.
The combination of our retail experience and Business Solutions offerings have
also led to a new contract to implement an ERP solution, based on Dynamics AX,
for a mail order clothing retailer.
During the year we were appointed one of just four UK-based Microsoft
go-to-market partners for their new Dynamics AX Retail product. We anticipate
that this product will stimulate further demand for our multi-channel retail and
Dynamics skills.
In the services sector we worked on a variety of projects including the
migration of an organisation providing psychometric testing services to a
cloud-based infrastructure, and re-platforming of the core systems of a pension
services provider. We also won a project with a utility services regulator to
help them specify and procure a regulatory system and subsequently were
appointed to undertake an IT strategy review.
During the second half we saw a resurgence in demand in the financial services
market. We are now engaged on major new programmes within a Tier 1 bank, using
our Advance Microsoft Consulting skills, in the enhancement of the systems which
underpin their wholesale banking credit risk management and reporting processes.
Charteris Business Solutions
This business area, which is centred on business and IT solutions based on
Microsoft Dynamics, performed strongly throughout the year. High levels of
project activity were maintained - particularly related to ERP solutions based
on Dynamics AX.
For leading animal feeds manufacturer, AB Agri, we successfully delivered one of
the most complex and sophisticated Dynamics AX solutions in the UK. This
provides an integrated solution to support the entire business processes of the
organisation (including sales, purchasing, finance and manufacturing functions).
In May we were selected by Southern Cross, the UK's largest Care homes provider,
to implement a Dynamics AX system to replace their core payroll and Human
Resources systems, serving over 44,000 employees.
We also continued the development of our CRM business, based on Microsoft
Dynamics CRM. With customer retention a top-priority issue for business in
current markets, effective customer relationship management is critical. We
successfully implemented Dynamics CRM at Moodys, one of the leading Oil and Gas
professional services companies worldwide.
As a result of progress this year, Charteris achieved membership of Microsoft's
President's Club for Microsoft Dynamics which recognizes the top Microsoft
Dynamics partners globally.
Charteris Team
The reputation of Charteris is built on the high calibre of its team and the
quality of delivery of our services to our clients. By its nature, our work
entails delivering strategic advisory services and the implementation of
solutions that operate at the heart of our clients' businesses. The benefits
and success that these services have enabled again this year are a great credit
to the Charteris team.
I would like to thank everyone in the team, whether in front-line delivery or in
support functions, for their dedication and hard work over the year. The
importance of this commitment is truly seen when considered in the context of
the value delivered to our clients.
David Pickering
Chief Executive
3 December 2010
FINANCE DIRECTOR'S REPORT
Overview
The FY10 results reflect the continuing challenging economic climate and
business environment for consulting services. The Group returned to an
underlying break-even position before exceptional items in Q4 but, due to losses
in the preceding two quarters, recorded an overall loss before tax and
exceptional charges of GBP0.84m (2009: GBP0.44m profit). Set out below is an
explanation of the key financial elements of the Group's performance.
Trading
The year has seen a decline in overall Group revenues of 24% as a result of
lower business volumes, especially in the retail sector, mitigated by the
positive contribution from our Dynamics AX practice acquired in 2008. The
business has accordingly taken action to keep its costs aligned to forecast
revenues and continues to do so. Consulting resources have been adjusted in
line with projected demand for our services and overhead staff and costs also
reduced proportionally. Dependence on associates has been kept to a minimum.
The business has seen a steady increase in business through the second half and
into FY11 and selective recruitment is now being undertaken in specific growth
markets as we try to meet growing demand for our services.
Key performance indicators
The key performance indicators used by the Group are utilisation and fee rates.
As a professional services business, where staffing is the principal cost, it is
vital to ensure that the available resource is matched with workload. This is
primarily done through close monitoring of the historic and forecast utilisation
of consultants and taking action accordingly. Fee rates have come under
pressure in some areas during the year due to increased competition in certain
markets.
Cash flow and Borrowings
There was a cash outflow of GBP0.7m (2009: GBP1.4m outflow) primarily relating
to trading performance in FY10. The Group's trade receivable days at year end
has risen to 62 (2009: 56) due to debt owed by one significant customer, which
has subsequently been settled. Cash at 31 July was GBP0.9m compared with
GBP1.5m last year. During the year, the Group received a net corporation tax
refund of GBP0.08m (2009: GBP0.5m payment) and paid a dividend of GBP0.08m
(2009: GBP0.20m).
Capital expenditure was kept to a minimum at GBP0.10m (2009: GBP0.02m)
reflecting essential IT asset renewals. Additionally, the Group took advantage
of a capital repayment holiday on its mortgage loan (2009: GBP0.59m repayment).
As at the year end the Group had an agreed overdraft facility with Natwest Bank
plc of GBP1.5m (2009: GBP1.5m) and a GBP2.3m (2009: GBP2.3m) loan facility with
Natwest Bank plc secured against the value of the Group's property.
Subsequent to the year end, the Group has renegotiated its banking facilities
and repaid an additional GBP350,000 of its loan with Natwest Bank plc with a
further instalment of GBP100,000 due at the end of July 2011. In addition, also
following the year end, the Group refinanced the overdraft with a GBP1.5m
invoice discounting facility. The nature of the Group's business is such that
there is inherent uncertainty over the commencement of major projects and timing
of cash flows arising from clients thereafter (see note 2).However, the
Directors believe that the Group will continue to operate within the agreed
facilities.
Patrick Carter
Finance Director
3 December 2010
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 JULY 2010
+-----------------------------------------+-------+-----------+-----------+
| | Notes | 2010 | 2009 |
| Continuing operations | | GBP'000 | GBP'000 |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Revenue | | 15,423 | 20,253 |
+-----------------------------------------+-------+-----------+-----------+
| | | _____ | _____ |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Other external charges | | (2,872) | (4,314) |
+-----------------------------------------+-------+-----------+-----------+
| Staff costs | | (11,423) | (14,065) |
+-----------------------------------------+-------+-----------+-----------+
| Other administrative expenses | | (2,099) | (3,040) |
+-----------------------------------------+-------+-----------+-----------+
| | | ______ | ______ |
+-----------------------------------------+-------+-----------+-----------+
| | | (16,394) | (21,419) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Operating (loss)/profit before | | (783) | 486 |
| exceptional items | | | |
+-----------------------------------------+-------+-----------+-----------+
| Redundancy costs | | (188) | (617) |
+-----------------------------------------+-------+-----------+-----------+
| Impairment of goodwill | | - | (1,000) |
+-----------------------------------------+-------+-----------+-----------+
| Share-based payment charge | | - | (35) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Operating loss | | (971) | (1,166) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Finance income | | - | 36 |
+-----------------------------------------+-------+-----------+-----------+
| Finance costs | | (57) | (84) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| (Loss)/profit before taxation and | | (840) | 438 |
| exceptional items | | | |
+-----------------------------------------+-------+-----------+-----------+
| Redundancy costs | | (188) | (617) |
+-----------------------------------------+-------+-----------+-----------+
| Impairment of goodwill | | - | (1,000) |
+-----------------------------------------+-------+-----------+-----------+
| Share-based payment charge | | - | (35) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Loss before taxation | | (1,028) | (1,214) |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
| Taxation | | 10 | 49 |
+-----------------------------------------+-------+-----------+-----------+
| | | _____ | _____ |
+-----------------------------------------+-------+-----------+-----------+
| Loss for the financial year | | (1,018) | (1,165) |
| attributable to owners of the parent | | | |
+-----------------------------------------+-------+-----------+-----------+
| | | _____ | _____ |
+-----------------------------------------+-------+-----------+-----------+
| Loss per share | | | |
+-----------------------------------------+-------+-----------+-----------+
| Basic | 4 | (2.49)p | (2.85)p |
+-----------------------------------------+-------+-----------+-----------+
| Diluted | 4 | (2.49)p | (2.85)p |
+-----------------------------------------+-------+-----------+-----------+
| | | | |
+-----------------------------------------+-------+-----------+-----------+
A dividend of 0.2p per ordinary share totalling GBP82,000 was declared and paid
in the year ended 31 July 2010 in respect of the financial year ended 31 July
2009. No dividend is proposed in respect of the financial year ended 31 July
2009.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+---------------------------------+-------+-------+-----------+-----------+
| | | | 2010 | 2009 |
| | | | GBP'000 | GBP'000 |
+---------------------------------+-------+-------+-----------+-----------+
| | | | | |
+---------------------------------+-------+-------+-----------+-----------+
| Loss for the financial year | | | (1,018) | (1,165) |
+---------------------------------+-------+-------+-----------+-----------+
| Deferred tax being income | | | 5 | 50 |
| recognised directly in equity | | | | |
+---------------------------------+-------+-------+-----------+-----------+
| | | | | |
+---------------------------------+-------+-------+-----------+-----------+
| Total comprehensive income for | | | (1,013) | (1,115) |
| the year attributable to owners | | | | |
| of the parent | | | | |
+---------------------------------+-------+-------+-----------+-----------+
| | | | | |
+---------------------------------+-------+-------+-----------+-----------+
CONSOLIDATED BALANCE SHEET
31 JULY 2010
+----------------------------------------+-------+----------+------------+
| | Notes | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
| | | | |
+----------------------------------------+-------+----------+------------+
| Non-current assets | | | |
+----------------------------------------+-------+----------+------------+
| Goodwill | | 6,079 | 6,179 |
+----------------------------------------+-------+----------+------------+
| Other intangible assets | | 77 | 11 |
+----------------------------------------+-------+----------+------------+
| Property, plant and equipment | | 3,143 | 3,208 |
+----------------------------------------+-------+----------+------------+
| Investments | | - | 1 |
| | | | |
+----------------------------------------+-------+----------+------------+
| Deferred tax asset | | 29 | 33 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| | | 9,328 | 9,432 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Current assets | | | |
+----------------------------------------+-------+----------+------------+
| Trade and other receivables | | 3,958 | 4,759 |
+----------------------------------------+-------+----------+------------+
| Current tax credit | | 16 | 83 |
+----------------------------------------+-------+----------+------------+
| Cash and cash equivalents | | 864 | 1,539 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| | | 4,838 | 6,381 |
+----------------------------------------+-------+----------+------------+
| | | ______ | ______ |
+----------------------------------------+-------+----------+------------+
| Total assets | | 14,166 | 15,813 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Current liabilities | | | |
+----------------------------------------+-------+----------+------------+
| Trade and other payables | | (3,868) | (4,343) |
+----------------------------------------+-------+----------+------------+
| Borrowings | | (185) | (86) |
+----------------------------------------+-------+----------+------------+
| Provisions | | (33) | (8) |
+----------------------------------------+-------+----------+------------+
| Deferred consideration | | (100) | - |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| | | (4,186) | (4,437) |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Total assets less current liabilities | | 9,980 | 11,376 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Non-current liabilities | | | |
+----------------------------------------+-------+----------+------------+
| Borrowings | | (2,126) | (2,199) |
+----------------------------------------+-------+----------+------------+
| Deferred consideration | | - | (200) |
+----------------------------------------+-------+----------+------------+
| Deferred tax liability | | (152) | (155) |
+----------------------------------------+-------+----------+------------+
| Provisions | | - | (25) |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| | | (2,278) | (2,579) |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Net assets | | 7,702 | 8,797 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Equity | | | |
+----------------------------------------+-------+----------+------------+
| Called up share capital | | 432 | 432 |
+----------------------------------------+-------+----------+------------+
| Share premium account | | 2,568 | 2,568 |
+----------------------------------------+-------+----------+------------+
| Merger reserve | | 2,573 | 2,573 |
+----------------------------------------+-------+----------+------------+
| ESOP reserve | | (194) | (194) |
+----------------------------------------+-------+----------+------------+
| Other reserve | | 26 | 26 |
+----------------------------------------+-------+----------+------------+
| Retained earnings | | 2,297 | 3,392 |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
| Total equity attributable to owners of | 5 | 7,702 | 8,797 |
| the parent | | | |
+----------------------------------------+-------+----------+------------+
| | | | |
+----------------------------------------+-------+----------+------------+
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2010
+----------------------------------------+-------+----------+----------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Loss before taxation | | (1,028) | (1,214) |
+----------------------------------------+-------+----------+----------+
| Adjustments for: | | | |
+----------------------------------------+-------+----------+----------+
| Depreciation of property, plant and | | 88 | 154 |
| equipment | | | |
+----------------------------------------+-------+----------+----------+
| Amortisation of intangible assets | | 12 | 1,032 |
+----------------------------------------+-------+----------+----------+
| Share-based payments | | - | 35 |
+----------------------------------------+-------+----------+----------+
| Net interest expense | | 55 | 48 |
+----------------------------------------+-------+----------+----------+
| | | ______ | ______ |
+----------------------------------------+-------+----------+----------+
| Operating cash flows before movements | | (873) | 55 |
| in working capital | | | |
+----------------------------------------+-------+----------+----------+
| Decrease in receivables | | 801 | 1,706 |
+----------------------------------------+-------+----------+----------+
| Decrease in payables | | (473) | (2,236) |
+----------------------------------------+-------+----------+----------+
| | | ______ | ______ |
+----------------------------------------+-------+----------+----------+
| Cash generated by operations | | (545) | (475) |
+----------------------------------------+-------+----------+----------+
| Income taxes repaid/(paid) | | 83 | (509) |
+----------------------------------------+-------+----------+----------+
| Interest paid | | (55) | (84) |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Net cash from operating activities | | (517) | (1,068) |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Investing activities | | | |
+----------------------------------------+-------+----------+----------+
| Interest received | | - | 36 |
+----------------------------------------+-------+----------+----------+
| Purchase of property, plant, equipment | | (101) | (17) |
| and software | | | |
+----------------------------------------+-------+----------+----------+
| Acquisition of SIG Consulting Limited | | - | (1,992) |
| (net of cash) | | | |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Cash used in investing activities | | (101) | (1,973) |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Financing activities | | | |
+----------------------------------------+-------+----------+----------+
| Dividends paid | | (82) | (204) |
+----------------------------------------+-------+----------+----------+
| Drawdown of loan (net of fees) | | 25 | 2,465 |
+----------------------------------------+-------+----------+----------+
| Repayment of borrowings | | - | (593) |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Net cash from financing activities | | (57) | 1,668 |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Decrease in cash and cash equivalents | | (675) | (1,373) |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Cash and cash equivalents at the | | 1,539 | 2,912 |
| beginning of the year | | | |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
| Cash and cash equivalents at the end | | 864 | 1,539 |
| of the year | | | |
+----------------------------------------+-------+----------+----------+
| | | | |
+----------------------------------------+-------+----------+----------+
NOTES:
+----+-------------------------------------------------------------+
| 1. | BASIS OF PREPARATION |
| | |
| | The financial information in this announcement does not |
| | constitute statutory financial statements as defined in |
| | section 434 of the Companies Act 2006. The statutory |
| | accounts for the year ended 31 July 2010 form the basis for |
| | the financial information presented by the directors in |
| | this preliminary announcement and will be delivered to the |
| | Registrar of Companies following the Company's Annual |
| | General Meeting. The audit report on these financial |
| | statements contained an Emphasis of Matter paragraph as |
| | follows: |
| | |
| | "Without qualifying our opinion, we draw attention to note |
| | 2 which indicates continued uncertainty over the level of |
| | demand for the Group's services and the timing of the |
| | settlement of outstanding receivables on major projects. In |
| | response to this uncertainty, the directors have considered |
| | the actions they would take in response to a fall in the |
| | anticipated level of revenues and/or timing of settlement |
| | of receivable balances. On this basis, the directors |
| | believe that the Group will continue to operate within the |
| | agreed banking facilities. These conditions, along with |
| | other matters as set forth in note 2 indicate the existence |
| | of a material uncertainty which may cast significant doubt |
| | about the group's ability to continue as a going concern. |
| | The financial statements do not include any adjustments |
| | that would result if the Company were unable to continue as |
| | a going concern." |
| | |
+----+-------------------------------------------------------------+
| | |
+----+-------------------------------------------------------------+
| 2. | SIGNIFICANT ACCOUNTING POLICIES - GOING CONCERN |
+----+-------------------------------------------------------------+
| | Subsequent to the year end, Natwest Bank Plc's call for a |
| | formal valuation of its property security revealed a |
| | decline in the property's market value and a resultant |
| | breach of the Loan to Value Covenant on the loan. The |
| | breach was waived by the Bank but has led to the Company's |
| | facilities being renegotiated and a requirement to repay an |
| | additional GBP350,000 of the loan in November 2010 with a |
| | further instalment of GBP100,000 due at the end of July |
| | 2011. The revised loan facility is repayable by |
| | instalments with interest being charged at a variable rate |
| | of 3.0% to 4.5% over Libor. |
| | |
| | The Group has also replaced its Natwest Bank overdraft |
| | facility with a GBP1.5m invoice discounting facility which |
| | bears interest at 2.25% over base rate and is secured |
| | against a fixed and floating charges over the assets of the |
| | Company and its subsidiaries |
| | |
| | The Directors have prepared projected cash flow information |
| | for the next twelve months taking account of the |
| | stabilisation of Company revenues over the past six months |
| | and the improvement in the Company's weighted pipeline of |
| | sales opportunities. The Directors have taken into |
| | consideration actions they could take in response to |
| | reasonable cash flow sensitivities arising from adverse |
| | movements in trading performance and/or timing of |
| | settlement of receivables. On this basis, the Directors |
| | believe that the Group will continue to operate within the |
| | agreed facilities. |
| | |
| | Whilst the Directors believe the going concern basis is |
| | appropriate, the nature of the Group's business is such |
| | that in the current economic conditions there is inherent |
| | uncertainty over the commencement of major projects and |
| | timing of cash flows arising from clients thereafter. |
| | Formally, these circumstances represent a material |
| | uncertainty that may cast significant doubt upon the |
| | Company's ability to continue as a going concern and |
| | therefore it may be unable to realise its assets and |
| | discharge its liabilities in the normal course of business. |
| | Nevertheless, after making enquiries and considering the |
| | uncertainties described above, the Directors have a |
| | reasonable expectation that the Company has adequate |
| | resources to continue in operational existence for the |
| | foreseeable future. For these reasons, they continue to |
| | adopt the going concern basis of accounting in preparing |
| | the annual financial statements. |
+----+-------------------------------------------------------------+
| | |
+----+-------------------------------------------------------------+
| 3. | DIVIDEND |
+----+-------------------------------------------------------------+
| | The Directors do not recommend that a dividend is paid. |
+----+-------------------------------------------------------------+
+-----+----------+------------------------------------------+----------+----------+----------+----------+----------+----------+
| 4. | (LOSS)/EARNINGS PER SHARE | |
+----------------+--------------------------------------------------------------------------------------+---------------------+
| | The calculations of (loss)/earnings per share are based on the following profits and numbers of | |
| | shares. | |
| | | |
+-----+-------------------------------------------------------------------------------------------------+---------------------+
| | | 2010 | 2009 | |
| | | GBP'000 | GBP'000 | |
+-----+----------------------------------------------------------------+---------------------+----------+---------------------+
| | (Loss)/profit after tax for the financial year before | (830) | 487 |
| | exceptional charges | | |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | Redundancy costs | (188) | (617) |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | Share-based payment charges | - | (35) |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | Impairment of goodwill | - | (1,000) |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | | | | |
+-----+-----------------------------------------------------+---------------------+--------------------------------+----------+
| | Loss after tax for the financial year | (1,018) | (1,165) |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | | | |
+-----+----------------------------------------------------------------+---------------------+--------------------------------+
| | | | | | | | | |
+-----+----------+------------------------------------------+----------+----------+----------+----------+----------+----------+
+------+------------------------------------------+-----------+-----------+
| | | 2010 | 2009 |
| | | No. of | No. of |
| | | shares | shares |
| | Weighted average number of shares | '000 | '000 |
+------+------------------------------------------+-----------+-----------+
| | | | |
+------+------------------------------------------+-----------+-----------+
| | For basic earnings per share | 40,857 | 40,838 |
+------+------------------------------------------+-----------+-----------+
| | Dilutive effect of share options | 2,367 | 316 |
+------+------------------------------------------+-----------+-----------+
| | | _ | |
| | | | |
+------+------------------------------------------+-----------+-----------+
| | For diluted earnings per share | 43,224 | 41,154 |
+------+------------------------------------------+-----------+-----------+
| | | | |
+------+------------------------------------------+-----------+-----------+
The weighted average number of shares for the purposes of basic and diluted
earnings per share excludes those owned by the Group's employee benefit trust.
+------+------------------------------------------+-----------+-----------+
| | (Loss)/earnings per share | 2010 | 2009 |
+------+------------------------------------------+-----------+-----------+
| | | | |
+------+------------------------------------------+-----------+-----------+
| | Basic | (2.49)p | (2.85)p |
+------+------------------------------------------+-----------+-----------+
| | Diluted | (2.49)p | (2.85)p |
+------+------------------------------------------+-----------+-----------+
| | Basic before exceptional charges | (2.03)p | 1.18p |
+------+------------------------------------------+-----------+-----------+
| | Diluted before exceptional charges | (2.03)p | 1.18p |
+------+------------------------------------------+-----------+-----------+
| | | | |
+------+------------------------------------------+-----------+-----------+
+------+-----------------------------------------+-----------+-----------+
| 5 | STATEMENT OF CHANGES IN EQUITY | |
+------+-----------------------------------------+-----------------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+------+-----------------------------------------+-----------+-----------+
| | | | |
+------+-----------------------------------------+-----------+-----------+
| | 1 August 2009 | 8,797 | 10,055 |
+------+-----------------------------------------+-----------+-----------+
| | Loss for the year | (1,018) | (1,165) |
+------+-----------------------------------------+-----------+-----------+
| | Share based payments | - | 35 |
+------+-----------------------------------------+-----------+-----------+
| | Dividends | (82) | (204) |
+------+-----------------------------------------+-----------+-----------+
| | Deferred tax | 5 | 50 |
+------+-----------------------------------------+-----------+-----------+
| | Issue of new shares | - | 26 |
+------+-----------------------------------------+-----------+-----------+
| | | _____ | _____ |
+------+-----------------------------------------+-----------+-----------+
| | 31 July 2010 | 7,702 | 8,797 |
+------+-----------------------------------------+-----------+-----------+
| | | | |
+------+-----------------------------------------+-----------+-----------+
6. This preliminary announcement was approved by the Board on 3
December 2010. Copies of this announcement will be available on the Company's
website: www.charteris.com.
7. Copies of the Company's report and financial statements will be
sent to shareholders shortly and will be available at the registered office of
the Company and on the Company's website www.charteris.com.
8. The AGM will take place at 10:00am on Wednesday, 12 January 2011
at Charteris House, 39/40 Bartholomew Close, London, EC1A 7JN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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