Charteris plc Interim Report 2007

Transcription

1 Charteris plc Interim Report 2007 Charteris plc, the business and IT consultancy, announces its interim results for the six months to 31 January HIGHLIGHTS Trading for the first half in line with management s expectations, with total revenue at 8.9m (1H06: 10.7m) Planned investment in our three specialised service lines (Infrastructure Optimisation, Intelligent Integration and Customer Centricity) led to key sales in all three areas in the second quarter Utilisation increased in the second quarter, but not quickly enough to offset the slower sales in established markets last summer Significant recruitment programme underway to meet expected upturn in activity Loss before taxation, goodwill amortisation and share options charge was 128k (1H06: profit on the same basis 562k) Gross cash balance 1.1m at 31 January 2007 ( 1.3m at 31 July 2006) Commenting on the results, David Mann, Chairman, said: The recent key sales and improvements in utilisation are encouraging signs that Charteris new strategy is proving successful. We believe that the Company remains on track to meet our expectations for the year. Press enquiries: David Pickering/Isobel Chester, Charteris plc Tel: Zoe Biddick, Biddicks Tel: Michael Shaw, Oriel Securities Limited Tel:

2 CHAIRMAN S STATEMENT RESULTS In the six months January 2007, Charteris made good progress with the development of its business in the new directions set out in the last Annual Report. In the second quarter, the Company secured key sales in all three of the specialised service lines, which had been identified in the earlier strategic review as offering significant potential for growth: Infrastructure Optimisation, Intelligent Integration and Customer Centricity. The common theme is that Charteris has developed specialised business and IT consultancy services to enable organisations to respond in a much more agile way to changes in their markets. These services are now being used by leading organisations in the early stages of some potentially major programmes. Results for the first half of the current financial year (1H07) were in line with our expectations at the time of the last Annual Report. Turnover reduced by 17% to 8.9 million (1H06: 10.7 million), primarily because trading in the first quarter had been affected by slower sales in our established markets last summer. The new programmes and other sales led to increased utilisation in the second quarter but the profit generated then was insufficient to offset the loss in the first quarter. In 1H07 as a whole there was a loss (before tax, goodwill amortisation and the new non-cash charge for share options) of 128k (1H06: profit on the same basis 562k). The loss before tax was 305k (1H06: profit of 382k). Gross cash balances at 31 January 2007 were 1.1 million (compared with 1.3 million at 31 July 2006). BUSINESS OVERVIEW Having initiated a number of strategic changes in the second half of the last financial year, much of the emphasis during this year is on the implementation of these changes throughout the business. In recent months we have achieved significant new sales in our service lines. These new sales do not yet span all of our business areas and this is reflected in the variable progress across the Practices at this stage. The process is most advanced in Retail Manufacturing and Services. Although its revenues were lower than in 1H06, we are now seeing very tangible benefits from the investment, with new project wins which offer the potential for significant future growth. Revenues of the Northern Practice have grown with a balance of established business and strategic initiatives. Revenues in Government and Legal have also grown with good established business that is likely to remain very important in these sectors. Revenues in Financial Services and Media were down as a result of slow sales of both established and new business; we are in the process of strengthening this business development team. The improved sales situation led us to increase recruitment targets significantly towards the end of the first half. The resulting recruitment programme will incur higher than normal associated costs in the second half but these are taken into account in our expectations for the year.

3 BUSINESS HIGHLIGHTS Northern In the Northern Practice we continue to enjoy an excellent preferred supplier relationship with a leading Financial Services provider. We have built on our position as experts in Credit Risk and our engagement now spans the breadth of our capability. Our programme management, business analysis and application development teams are working closely with our clients to shape a number of innovative business solutions. The year has also seen our engagement extend beyond Credit Risk; in Vehicle Asset Management we are providing project management and project office support and in Investment and Insurance we continue to provide specialist Microsoft skills. As a part of the Infrastructure Optimisation service line, the Practice has worked actively with Microsoft to promote solutions based on their major new releases of Exchange, Vista and Office (EVO) products. Our team engaged prior to the release of the product set and this led to new business related to the deployment of the Office 2007 System for a leading global retail bank and Exchange 2007 for Midlothian Council. We are seeing high levels of activity in the EVO market and have built a strong pipeline of opportunities in both the financial services and public sector markets. Government and Legal The Government Practice made good progress in the secure, central and local government markets. Particularly strong growth was experienced in the secure government sector with major account relationships deepening and drawing increasingly on our skills in business change, programme management and commercial management. The first half saw the successful delivery of the first phase of the Cabinet Office s SCOPE programme, which will enhance the sharing of information between key members of the UK intelligence and security community. Charteris was engaged to work alongside the client and the government departments, providing advice at senior level on the overall programme, technical architecture and service rollout. Towards the end of the period the Practice also delivered the latest in a succession of solutions in local government. This was a major new system for Ealing Council, which provides a sound platform for continuing improvement in social care services for children and adults. This latest phase implemented the Integrated Children s System, a key enabler in delivering the Government s Every Child Matters agenda. Now with one of the strongest team of IT expert witnesses in the UK, we have experienced considerable growth in demand from the legal sector. We have continued to act in a number of high-profile, multi-million pound cases where IT issues play a significant role. The period has also seen the expansion of our services to encompass Early Neutral Evaluation, Mediation, Arbitration and Expert Determination. Financial Services and Media In the Financial Services and Media Practice, the centre of business activity has been on key account relationships in investment banking, insurance and broadcast media. Building further on our established relationship with Macquarie Bank, we were appointed to support Macquarie s recent acquisition, East London Bus Group,

4 formerly part of Stagecoach. This project utilises our Intelligent Integration capabilities to transform their back office processes by implementing and migrating to a new Finance and Human Resources platform. The Practice has continued to expand its relationship with ITV, working on a number of new projects. These new assignments have added business consulting services to the existing development work. Three of the projects have used elements of Charteris new Customer Centric framework for business change. The fourth, Auto-Slotting of Commercials, has built on Charteris development framework by adding the newly developed Charteris Requirements Management approach. Retail, Manufacturing and Services The Retail, Manufacturing and Services Practice has made considerable progress through the half. Important new business has been won as a result of our focus on Customer Centricity in multi-channel retailing. This includes several new relationships with well-known High Street retailers and further growth in our relationship with Tesco, where we are now working at the heart of one of the industry s largest e-commerce initiatives. Our Intelligent Integration service line is also driving new opportunities in the definition of agile enterprise business systems. We have recently been appointed as the e-commerce development partner and programme manager for Europe s leading specialist video and computer game retailer Game. This builds upon an initial scoping and high level design consultancy assignment which was successfully completed in February. We have a contract with Debenhams.com, a leading multi-channel retailer, to assist in the re-engineering of their Direct fulfilment operation. We are working closely with the business to detail its requirements and also providing support at key stages in the programme of change. For Microsoft we continue to work on some of their flagship projects, such as the Government Gateway, which utilise a range of leading edge Microsoft products. We have also completed our first consultancy assignment for Microsoft's Dynamics consulting business. For a multinational security services provider we were awarded the first phase of a change programme to help re-engineer its core business processes to drive greater business efficiency and enable agile growth. Following the successful completion of this work we commenced the detailed design phase in preparation for an ERP implementation. OUTLOOK While Charteris will continue to provide its established, broadly-based services, the directors believe that the new specialised services offer much greater opportunities for growth. Accordingly, for over a year now, the Company has been investing in a wideranging change programme, which has encompassed several new appointments in the practice management and sales teams, and investment in the recruitment and development of professional staff, as well as consolidation of the specialised service propositions. These changes have already achieved substantial benefits in some sectors and the aim is to ensure that the Company as a whole is well positioned to exploit business opportunities in the new strategic directions as soon as possible.

5 The directors recognise that the change programme represents an interruption to growth for investors, but believe that the recent key sales and improvements in utilisation are encouraging signs that the strategy is proving successful. We believe that the Company remains on track to meet our expectations for the year. David Mann Chairman 3 April 2007

6 Consolidated profit and loss account Charteris plc Interim Accounts 2007 Jan 2007 Jan mths Jul 2006 Turnover 8,874 10,662 20,089 Other external charges 1,493 2,439 4,219 Staff costs 6,514 6,640 13,188 Depreciation Goodwill amortisation Administrative expenses ,827 9,177 10,285 19,787 Operating (loss)/profit before goodwill amortisation and share options charge (126) Goodwill amortisation (154) (155) (310) Share options charge (23) (25) (54) Operating (loss)/profit (303) Interest receivable Interest payable and similar charges (20) (25) (50) (Loss)/profit on ordinary activities before taxation, goodwill amortisation and share options charge (128) Goodwill amortisation (154) (155) (310) Share options charge (23) (25) (54) (Loss)/profit on ordinary activities before taxation (305) Taxation 31 (172) (191) (Loss)/profit on ordinary activities after taxation and for the financial period (274) (Loss)/earnings per share Basic (0.67)p 0.52p 0.28p Diluted (0.67)p 0.51p 0.28p A dividend of 203,000 (0.5p per ordinary share) was declared and paid in the six months to 31 January 2007 in respect of the financial year July Turnover and operating (loss)/profit all derive from continuing operations.

7 Consolidated balance sheet 31 Jan Jan July 2006 Fixed assets Intangible assets 4,866 5,213 5,020 Tangible assets 2,475 2,595 2,525 Investments ,342 7,809 7,546 Current assets Debtors 3,857 4,094 3,986 Cash at bank and in hand 1,083 1,774 1,280 4,940 5,868 5,266 Creditors : amounts falling due within one year (3,774) (4,469) (3,763) Net current assets 1,166 1,399 1,503 Total assets less current liabilities 8,508 9,208 9,049 Creditors : amounts falling due after more than one year (497) (683) (591) Provisions for liabilities (30) (23) (23) Net assets 7,981 8,502 8,435 Capital and reserves Called up share capital Share premium account 2,544 2,544 2,544 Merger reserve 3,573 3,573 3,573 Other reserves Profit and loss account 1,602 2,123 2,056 ESOP reserve (194) (194) (194) Equity shareholders' funds 7,981 8,502 8,435

8 Consolidated cash flow statement Jan 2007 Jan mths Jul 2006 Net cash flow from operating activities Returns on investment and servicing of finance Interest received Interest paid (20) (25) (49) Net cash inflow from returns on investment and servicing of finance (2) 5 4 Taxation - - (343) Capital expenditure Purchase of tangible fixed assets (70) (78) (130) Equity dividends paid (203) (203) (203) Cash outflow before use of liquid resources and financing (108) (227) (633) Management of liquid resources Increase in term bank deposit (11) (450) - Financing Repayment of mortgage loan (89) (84) (172) Decrease in cash in period (208) (761) (805) Reconciliation of net cash flow to movement in net funds Decrease in cash in period (208) (761) (805) Cash outflow from change in mortgage debt Cash outflow from change in liquid resources Change in net funds resulting from cash flows (108) (227) (633) Amortisation of loan arrangement fees - - (1) Movement in net funds in period (108) (227) (634) Opening net funds 509 1,143 1,143 Closing net funds

9 Notes 1. ACCOUNTING POLICIES The financial information contained in this interim report does not constitute statutory accounts. The interim results, which have not been audited, have been prepared using accounting policies consistent with those used in the preparation of the Annual Report and Accounts for the Year July 2006, except as noted below. Those accounts 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 The group has adopted Financial Reporting Standard 20 Share-based payment (FRS 20) for the preparation of this financial information and the comparative numbers have been restated where applicable. In accordance with FRS 20, the fair value of share options has been calculated as at the date of grant using the Black-Scholes options pricing model. It is expensed on a straight line basis over the vesting period based on the Directors estimate of options that are likely to vest. The adoption of this standard has resulted in a profit and loss account charge in the period of 23,000 (6 months to 31 January 2006: 25,000; year to 31 July 2006: 54,000). The resultant deferred tax asset arising has increased shareholders funds at 31 January 2007 by 22,000 (31 January 2006: 13,000; 31 July 2006: 18,000). 2. TAXATION Taxation for the 6 months to 31 January 2007 is based on the effective rate of taxation which is estimated to apply to the year ending 31 July RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES ended 31 Jan 2007 ended 31 Jan mths ended 31 Jul 2006 Operating (loss)/profit (303) Share options charge Depreciation and amortisation Increase/(decrease) in provisions 7 (15) (15) Decrease in debtors Increase/(decrease) in creditors 6 (1,008) (1,371) Net cash flow from operating activities RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS FUNDS Jan 2007 Jan mths Jul 2006 Opening equity shareholders funds (as previously stated) 8,417 8,462 8,462 Prior period adjustment Opening equity shareholders funds (as restated) 8,435 8,470 8,470 (Loss)/profit for the financial period (274) Share options charge Dividends paid (203) (203) (203) Closing equity shareholders funds 7,981 8,502 8, (LOSS)/EARNINGS PER SHARE Basic (loss)/earnings per share have been calculated by dividing the (loss)/profit on ordinary activities after taxation in the period by 40,697,317 shares (31 January 2006: 40,697,317 shares) being the weighted average number of shares in issue after excluding those shares owned by the employee benefit trust. The

10 diluted earnings per share calculation has been based on a fair value of 15.5p per share (31 January 2006: 38.6p per share). The weighted average number of dilutive shares is 40,726,195 (31 January 2006: 41,225,393). ended 31 Jan 2007 ended 31 Jan mths Jul 2006 Basic before amortisation of goodwill and share options charge (0.25)p 0.95p 1.15p Diluted before amortisation of goodwill and share options charge (0.25)p 0.93p 1.13p 6. INTERIM FINANCIAL STATEMENTS The interim financial statements were approved by the directors on 3 April The Interim Report will be sent to shareholders by the end of April and will be available free of charge from the Company s registered office and the website 7. FULL YEAR FINANCIAL STATEMENTS We expect to announce our full year results in October 2007.