TIDMCAE
RNS Number : 2395Z
Charteris PLC
13 March 2012
13 March 2012
CAE
Charteris plc
("Charteris" or the "Company")
Interim Report
for the six months ended 31 January 2012
Charteris plc, the business and IT consultancy, announces its
interim results for the six months to 31 January 2012.
KEY POINTS
.. Revenue of GBP4.7m (H1 2011: GBP6.6m)
.. Loss before taxation was GBP428k (H1 2011: GBP710k loss)
.. Diluted Loss per Share of 1.02p (H1 2011: 1.73p loss)
.. Net debt at 31 January 2012 was GBP159k (31 January 2011: GBP2,058k)
.. In Microsoft Technologies, recently closed sales together
with a recovery in our Dynamics business have led to an invigorated
pipeline of opportunities.
.. In Business Consulting, key accounts in the public sector
continued to provide a solid basis for the business. New client
business in the private sector proved challenging to secure and
fell below expectations, though the sales situation improved going
into the second half of 2012 (H2).
Commenting on the results Cliff Preddy, Chairman, said:
"The reorganisation of the business around the primary
capabilities of Charteris has simplified operations and been
received well by clients and potential clients in our chosen
markets.Given the general economic backcloth, markets remain tough.
However, towards the end of the period we began to detect signs of
increased willingness of private sector clients to invest, with a
resulting strengthening of the weighted pipeline of potential
sales."
Enquiries:
Allan Barr/Patrick Carter, Charteris Tel: 020 7600 9199
plc
Roland Cornish/James Biddle, Beaumont Tel: 020 7628 3396
Cornish Limited (Nominated Adviser
and Broker)
Charteris plc Interim Report 2012
The further simplification of the business organisation around
our respective Microsoft Technologies and Business Consulting
capabilities has been well received by clients and business
partners in our chosen markets. Significant cost savings resulted
from the associated changes and these have underpinned our
determined efforts to establish a stable basis for profitable
future growth. Trading conditions for the Company continued to be
demanding in the six-month period ended 31 January 2012 (H1 2012).
Performance across the broader business has generally been
encouraging, underpinned by key account revenues. However, we have
continued to experience slower than expected progress in converting
prospects in certain of our markets with the result that a return
to sustained, profitable month-on-month trading has not yet been
accomplished.
In Microsoft Technologies, a combination of recently closed
sales together with a recovery in our Dynamics business has led to
a reinvigorated pipeline of opportunities and the need for
selective recruitment to meet demand. In Business Consulting, our
public sector work has been stable but we struggled to secure
sufficient new client business in the private sector for most of H1
although the situation improved significantly from December.
FINANCIAL SUMMARY
Revenue in H1 2012, of GBP4.7m, was 29% lower than in the
comparable six-month period of the previous financial year (H1
2011: GBP6.6m) which was matched by a 30% reduction in costs. The
resulting loss before taxation was GBP428k (H1 2011: GBP710k loss)
and diluted loss per share 1.02p (H1 2011: 1.73p).
Cash and cash equivalents were negative GBP159k at 31 January
2012 (31 January 2011: negative GBP142k). Net debt at 31 January
2012 was GBP159k (31 January 2011: GBP2,058k).
BUSINESS OVERVIEW
Charteris provides business and IT consulting services that help
our clients improve customer service, reduce operational costs, and
manage the successful delivery of organisational change programmes.
Our consultants also provide expert advice during due diligence
exercises, and mediation and expert witness services where problems
have arisen during the execution of other parties' technology
supply contracts.
In addition, the Company is a leading Microsoft "full stack"
systems integrator for the UK mid-market, delivering rapid business
change using the full range of Microsoft's technology and
platforms, including Enterprise Resource Planning (ERP) and
Customer Relationship Management (CRM) applications software
products (Microsoft Dynamics AX and CRM).
Business Consulting
Demand for our advisory and programme management services to
some of the most important homeland security projects has remained
stable.
In Local and Regional Government, we continue to help a key
client improve community support services to Older People, Disabled
Children and Adults whilst delivering efficiency savings. We have
also supported a number of local councils in securing central
government seed funding monies to perform efficiency improvement
studies to identify how larger savings might be made without
negatively impacting on end user services. Initial contracts were
signed recently with three councils and proposals are outstanding
with several others.
Whilst we have good prospects to pursue in the commercial
sector, revenue in this area declined in the period. We recently
secured engagement with a brand name high-street and mail-order
retail company that has exciting long term possibilities. Together
with the growth of revenue from a number of accounts in the media
sector, we have the potential to reverse this trend.
Microsoft Technologies
The Company is seeing growing demand from clients who want to
deal with a Microsoft "full stack" IT services supplier that can
project manage and deliver integrated solutions incorporating the
full range of Microsoft's business products and services including
ERP, CRM, core infrastructure, collaboration, .Net development,
unified communications and cloud technology. This activity is a
major differentiated sales proposition for Charteris and underpins
our status as the current (2011) UK Microsoft Country Partner of
the Year.
Charteris has a strong level of repeat key account revenues for
Advanced Microsoft Consulting services from clients in retail
banking, financial services, local government and support services.
During the period, we have reinforced our ties with Microsoft and
used this to leverage our position in the Microsoft market place
through targeted initiatives supported by agreements with selected
partners. This has resulted in a noted broadening out of our client
base in this area with several early stage client engagements that
have genuine growth potential.
In the last annual report we noted that our Dynamics ERP
activities had been scaled back, and brought under common
leadership with our other business based on Microsoft Technologies,
so that the marketing, sales and execution approach and processes
could be more closely aligned. The investment made to restructure
this business has produced positive results. Towards the end of the
period the Company has secured significant new clients, improved
client satisfaction in existing accounts and built up a strong
pipeline of potential future opportunities.
GOING CONCERN
The rationalisation of the Company's office locations from four
to two (London and Edinburgh) has been completed. We have
consolidated our three southern offices into more appropriate
rented premises in central London, which has proved generally more
convenient for both staff and clients. The new configuration of
offices will meet the future needs of the business more effectively
and funds raised from the disposal of surplus premises in London
and Northleach, together with our taking advantage of the end of
the lease at Harpenden, have been released for reinvestment in the
business.
The Company meets its day-to-day working capital requirements
through a GBP1.5m invoice discount facility.
The Board regularly reviews the adequacy of financial resources
available. Particularly in the current economic conditions, there
is inherent uncertainty over the commencement of projects, timing
of cash flow arising from clients thereafter and the availability
of alternative or additional finance should this be required.
Therefore the Directors continue to consider a number of options
relating to these issues. Taking into account actions that could be
taken in response to reasonable cash flow sensitivities, the
Directors believe that the Company will continue to operate within
its agreed facilities. However, it is felt that the Company could
benefit from a small additional equity buffer enabling business
decisions to be taken on a longer term basis. A further
announcement will be made once this is finalised.
STAFF
The Board would like to thank the Company's staff for their
active support through a period of major change. Their flexibility
and commitment to providing excellent levels of service to clients
is warmly appreciated.
OUTLOOK
Given the general economic backcloth, markets remain tough.
However, towards the end of the period we began to detect signs of
increased willingness of private sector clients to invest with a
resulting strengthening of the weighted pipeline of potential
sales.
The desired state for the Company is stable, profitable growth,
with a short term objective of reliable month-on-month profitable
trading. These goals remain to be achieved but the Directors
believe that the organisational platform and identified sales
opportunities are in place for their delivery.
Cliff Preddy
Chairman
13 March 2012
CONSOLIDATED INCOME STATEMENT
Notes
6 mths ended 6 mths ended Year ended
31 Jan 2012 31 Jan 2011 31 Jul 2011
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
Continuing operations
Revenue 4,683 6,633 12,512
_____ _____ _____
Other external charges (958) (1,108) (2,389)
Staff costs (3,310) (5,068) (9,016)
Administrative expenses (826) (1,127) (4,428)
______ ______ ______
(5,094) (7,303) (15,833)
Operating loss before exceptional
items (379) (478) (671)
Redundancy costs (32) (192) (235)
Impairment of goodwill - - (2,100)
Impairment and loss on disposal
of property, plant and equipment - - (315)
Operating loss (411) (670) (3,321)
Finance costs (17) (40) (135)
Loss before taxation and exceptional
items (396) (518) (806)
Redundancy costs (32) (192) (235)
Impairment of goodwill - - (2,100)
Impairment and loss on disposal
of property, plant and equipment - - (315)
------------------------------------- -------- ------------ ------------ ------------
Loss before taxation (428) (710) (3,456)
Taxation 8 - 128
_____ _____ _____
Loss for the financial period
attributable to owners of the
parent (420) (710) (3,328)
_____ _____ _____
Loss per share
Basic and diluted 2 (1.02)p (1.73)p (8.17)p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 mths
6 mths ended 6 mths ended ended 31
31 Jan 2012 31 Jan 2011 Jul 2011
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
Loss for the financial period (420) (710) (3,328)
Deferred tax recognised directly
in equity - - (4)
Total comprehensive income for
the period attributable to owners
of the parent (420) (710) (3,332)
CONSOLIDATED BALANCE SHEET
31 Jan 2012 31 Jan 2011 31 July
(Unaudited) (Unaudited) 2011 (Audited)
GBP000 GBP000 GBP000
Non-current assets
Goodwill 3,979 6,079 3,979
Other intangible assets 43 109 78
Property, plant and equipment 63 3,115 27
Deferred tax asset 34 29 34
4,119 9,332 4,118
Current assets
Trade and other receivables 2,186 2,866 2,348
Current tax credit - 16 -
Cash and cash equivalents 257 564 1,076
2,443 3,446 3,424
Non-current assets classified
as held for resale - - 210
2,443 3,446 3,634
______ ______ ______
Total assets 6,562 12,778 7,752
Current liabilities
Invoice discounting facility (416) (706) (384)
Trade and other payables (2,118) (2,900) (2,864)
Borrowings - (282) -
Provisions (10) (52) (58)
Deferred consideration - (40) -
(2,544) (3,980) (3,306)
Total assets less current liabilities 4,018 8,798 4,446
Non-current liabilities
Borrowings - (1,634) -
Deferred tax liability (26) (152) (34)
(26) (1,786) (34)
Net assets 3,992 7,012 4,412
Equity attributable to owners
of the parent
Called up share capital 434 432 434
Share premium account 2,606 2,568 2,606
Merger reserve 2,573 2,573 2,573
ESOP reserve (194) (194) (194)
Other reserve 26 26 26
Retained earnings (1,453) 1,607 (1,033)
Total equity 3,992 7,012 4,412
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the equity owners of the parent
Share Share Merger Other Retained ESOP Total
capital premium reserve reserve earnings Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
31 July 2010 (audited) 432 2,568 2,573 26 2,297 (194) 7,702
Comprehensive income
Loss for the period - - - - (710) - (710)
_____ _____ _____ _____ _____ _____ _____
Total comprehensive
income for the
period - - - - (710) - (710)
Transactions with
Owners
Share-based payment
charge - - - - 20 - 20
_____ _____ _____ _____ _____ _____ _____
Total transactions
with Owners - - - - 20 - 20
31 January 2011
(unaudited) 432 2,568 2,573 26 1,607 (194) 7,012
Comprehensive income
Loss for the period - - - - (2,618) - (2,618)
Deferred tax - - - - (4) - (4)
_____ _____ _____ _____ _____ _____ _____
Total comprehensive
income for the
period - - - - (2,622) - (2,622)
Transactions with
Owners
Share-based payment
charge - - - - (18) - (18)
Issue of shares 2 38 - - - - 40
_____ _____ _____ _____ _____ _____ _____
Total transactions
with Owners 2 38 - - (18) - 22
_____ _____ _____ _____ _____ _____ _____
31 July 2011 (audited) 434 2,606 2,573 26 (1,033) (194) 4,412
Comprehensive income
Loss for the period - - - - (420) - (420)
_____ _____ _____ _____ _____ _____ _____
Total comprehensive
income for the
period - - - - (420) - (420)
31 January 2012
(unaudited) 434 2,606 2,573 26 (1,453) (194) 3,992
CONSOLIDATED STATEMENT OF CASH FLOWS
6 mths ended 6 mths ended Year ended
31 Jan 2012 31 Jan 2011 31 Jul 2011
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
Loss before taxation (428) (710) (3,456)
Adjustments for:
Depreciation of property, plant
and equipment 6 35 349
Amortisation of intangible assets 39 26 61
Impairment of goodwill - - 2,100
Share-based payments - 20 2
Net interest expense 17 40 104
Loan finance costs - 1 31
______ ______ ______
Operating cash flows before movements
in working capital (366) (588) (809)
Decrease in receivables 177 1,091 1,610
Decrease in payables (809) (948) (979)
______ ______ ______
Cash outflow from operations (998) (445) (178)
Income taxes repaid - - 18
Interest paid (17) (40) (104)
______ ______
Net cash outflow from operating
activities (1,015) (485) (264)
______ ______
Investing activities
Disposal of property, plant and
equipment and software 225 - 2,575
Purchase of property, plant and
equipment and software (61) (64) (80)
Acquisition of SIG Consulting
Limited (Earn Out) - (60) (60)
Cash generated/(used) by investing
activities 164 (124) 2,435
Financing activities
Repayment of borrowings - (397) (2,343)
Net cash outflow from financing
activities - (397) (2,343)
Net decrease in cash and cash
equivalents (851) (1,006) (172)
Cash and cash equivalents at the
beginning of the period 692 864 864
Cash and cash equivalents at the
end of the period (159) (142) 692
Consisting of:
Cash at bank 257 564 1,076
Invoice discounting facility (416) (706) (384)
(159) (142) 692
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 financial statements for the year ended 31 July 2011
have been filed with the Registrar of Companies and received an
unqualified audit report which did not contain a statement under
sections 498(2) or (3) of the Companies Act 2006.
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 acquisition 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.
2. LOSS PER SHARE
The calculations of loss per share are based on the following
losses and numbers of shares.
6 mths ended 6 mths ended Year ended
31 Jan 2012 31 Jan 2011
(Unaudited) (Unaudited) 31 Jul
2011
(Audited)
GBP'000 GBP'000 GBP'000
Loss after tax for the financial
year before exceptional charges (388) (518) (678)
Redundancy costs (32) (192) (235)
Impairment and loss on disposal
of property, plant and equipment - - (315)
Impairment of goodwill - - (2,100)
Loss after tax for the financial
year (420) (710) (3,328)
The weighted average number of shares for the purposes of basic
earnings per share, excluding those owned by the Group's employee
benefit trust, are:
6 mths ended 6 mths ended 12 mths
31 Jan 2012 31 Jan 2011 ended
(Unaudited) (Unaudited) 31 Jul 2011
(Audited)
Weighted average number No. of shares No. of shares No. of shares
of shares '000 '000 '000
For basic earnings per
share 41,089 40,944 40,964
Potentially dilutive effect
of share options 1,223 2,237 1,788
For diluted earnings per
share 42,312 43,181 42,752
Basic and diluted (1.02)p (1.73)p (8.17)p
Basic and diluted before
exceptional charges (0.94)p (1.27)p (1.67)p
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purposes of calculating
the diluted loss per share are identical to those used for basic
loss per ordinary share. This is because the exercise of share
options and other benefits would have the effect of reducing loss
per share and is therefore not dilutive under the terms of IAS33
Earnings per share.
3. INTERIM FINANCIAL INFORMATION
The interim financial information was approved by the directors
on 13 March 2012. The Company expects to announce its full year
results in November 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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