2016 Results Presentation David Rugg Chief Executive Dan Prickett - - PowerPoint PPT Presentation

2016 Results Presentation

David Rugg

Chief Executive

Dan Prickett

Chief Financial Officer

1

An Introduction to Christie Group

David Rugg

Chief Executive

2

About Us

A leader in the provision of professional business services to the leisure, retail and care sectors ‘We believe that our market position is key to maximising the

• Christie Group offers a portfolio of professional business

services for the leisure, retail and care sectors.

• Our focus on a limited number of sectors gives us an

unrivalled market awareness in each of these areas.

• We do not adopt a principal position or co-invest.
• We never compete with our clients.
• position is key to maximising the
• pportunities presented by both

the recovering market on one hand and one showing signs of distress on the other.’ We never compete with our clients.

• We operate in the sectors in which our experience allows

us to deliver intelligent solutions.

• The results: a greater understanding of our clients’
• perations and a heightened ability to help them improve

efficiency, enhance trading profits and increase the value of their businesses.

• Christie Group aligns its strategy around a number of

key focal points as illustrated. Our strategy is focused

• n our clients to ensure that we meet their needs.

This strategic approach provides a clear and consistent approach, which is tried and tested through the business cycle. With a focus on our core sectors, diversification through our global reach, maximising synergies across the group and a flexible approach we can deliver

Client Focus

Brand Strength & Endurance

• the group and a flexible approach we can deliver

best-in-class results for our clients.

• The agreed board objective is to rebuild profit

to that previously reached £10million plus.

• As profits increase, we intend to distribute a

rising and covered dividend stream to reward shareholders while at the same time strengthening the balance sheet

Financial Stability

Professional Business Services (PBS)

Christie & Co is a leading specialist firm providing business intelligence in the hospitality, leisure, care and retail sectors. A market leader in its sectors, it employs the largest teams of sector specialists in the UK providing professional agency, valuation and consultancy services. Christie Finance has 40 years’ experience in financing businesses in the hospitality, leisure, care, retail and medical sectors. Christie Finance prides itself on its speed of response to client opportunities and its strong relationships with finance providers.

Stock & Inventory Systems & Services (SISS)

Orridge is Europe’s longest established stocktaking business specialising in all fields of retail stocktaking including high street, warehousing and factory operations, as well as supply chain services. Orridge prides itself on the speed in which it supplies high quality management information to its clients. Venners is the leading supplier of stocktaking, inventory, consultancy services and related stock management systems to the hospitality sector. Venners is the largest and longest established stock audit company in the sector in the UK.

• with finance providers.

With 40 years’ experience arranging business insurance in the hospitality, leisure, care, retail and medical sectors, Christie Insurance is a leading company in its markets. It delivers and exceeds clients’ expectations in terms of the cost of their insurance and the breath of its cover. Pinders is the UK's leading specialist business appraisal, valuation and consultancy company, providing professional services to the licensed, leisure, retail and care sectors, and also the commercial and corporate business sectors. Pinders staff use business analysis and surveying skills to look ay the detail of the businesses to arrive at accurate assessments of their trading potential and value. the sector in the UK. Vennersys operates in the UK and North America and delivers online Cloud-based ticketing sales and admission Systems to visitor attractions such as historic houses and estates, museums, zoos, safari parks, aquaria and

• cinemas. It has over 20 years’ experience

delivering purpose-designed solutions for clients’ ticketing, admissions, EPoS and food and beverage sales requirements.

Our Services

Providing joined-up solutions throughout the client lifecycle

Investment advice

Regardless of whether a client is looking to improve, develop, invest in, acquire

• r dispose of a business or

asset, our companies combine to provide support throughout the client

• lifecycle. Leveraging the

synergies that arise from

• synergies that arise from

this collaboration within and across companies enhances both revenue generation and profit conversion.

Our Areas of Expertise

We focus on a section of areas covering a wide range of property-based businesses in Care, Leisure and Retail

• Luxury hotels
• Mid-market

hotels

• Upscale Hotels
• Budget hotels
• Boutique hotels
• Aparthotels
• Guest houses
• Freehouses
• Tenanted pubs
• Managed

houses

• High street

bars

• Late night

venues

• Nightclubs
• Casual dining
• Fine dining
• Independents
• Sandwich bars
• Coffee shops
• Tea rooms
• Takeaways
• Cinemas
• Health &

fitness

• Sports clubs
• Bingo halls
• Ten pin

bowling

• Snooker clubs
• Elderly care
• Specialist care
• Private hospitals
• Education
• Childcare
• Nursing and

residential

• Supported living
• Supermarkets
• Convenience

stores

• PFS Forecourts
• CTNs
• Off licences
• Post Offices
• Fish & chip
• Pharmacies
• Dentists
• GP Surgeries
• Vets
• Opticians

Hotels Care Public Houses Restaurants Leisure Medical Retail

• Guest houses
• B&Bs
• Mid-market

hotels

• Hostels
• Nightclubs
• Holiday parks
• Golf courses
• Gaming sector
• Supported living
• Funeral directors
• Independent

schools

• Fish & chip

shops

• Garden centres
• Newsagents
• Booksellers
• Warehouses
• Supply Chain

Premises

• Specialist shops

Estimated Market Sizes UK

• 48,000 pubs
• 35,000 hotels
• 20,000 restaurants
• 24,000 care facilities
• 14,500 pharmacies
• 12,500 dental practices
• 8,500 filling stations
• 100,000+ retail

Estimated Market Sizes Europe

• Over 132,000 hotels

(source Otus & Co)

• Business Review & Outlook

David Rugg

Chief Executive

2016 Headlines

Second half trading normalised after Brexit-suppressed first half in PBS division

• Revenue growth of 1.2% to £64.5m (2015: £63.7m)
• Operating profit before exceptional items of £1.0m (2015: £3.8m)
• £1.3m exceptional operating profit arising from indexation cap on final salary pensions
• Total operating profit for year of £2.3m (2015: £3.8m)
• Earnings per share of 5.35p per share (2015: 9.73p)
• !

Earnings per share of 5.35p per share (2015: 9.73p)

• Proposed final dividend of 1.5p (2015: 1.5p) maintains full year dividend at 2.5p per share
• H2 operating profit before exceptionals of £1.9m, reversing £0.9m H1 operating loss
• PBS division recovered from challenging first half to record H2 £1.8m operating profit before

exceptionals - a return on H2 PBS revenues of 9.8%

• SISS division reduces operating losses from £1.0m in 2015 to £0.2m, with progress in

all three businesses

PBS Review of the Year

H2 recovery encouraging following a first half and summer where M&A activity was lacking

• The lack of M&A activity significantly dented first half performance
• Despite this, we delivered agency activity across our trade sectors
• Star performer was Children’s Day Care sector, while we

saw strong performances from our Care and Medical teams

• Institutional investors are including income-generating business assets

in constructing sector-based portfolios

• Christie & Co has the experience, scale and capabilities to support

corporate investors in these aims

• corporate investors in these aims
• Our Asia desk was successful in assisting sales in Europe to

Chinese buyers

• Private clients remain key and our ability to connect with first-time buyers

remains fundamental

• Our focus on better balancing our agency and advisory

continues, with valuation instructions increased by 12%

• Consultancy activities have been expanded into both the dental

and pharmacy sectors with briefs including “whole of market” reviews

Average values

Sale prices continued to climb through 2016, with good UK assets presenting an attractive investment proposition for would-be buyers

Average Commissions

Average commission levels have followed the rise in business values, but flattened out in second half which is arguably necessary if volumes are to pick up

Average Commisions

14 16 18 20 22 24 (£'000)

• 2

4 6 8 10 12 14 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Value (£'0 Period

UK Deal Volumes (“Gross Deals Agreed”)

2016 saw transaction volumes remain very low, at below half that seen at the peak, particularly noting the addition of new sectors; no evidence to us, however, of market sizes diminishing

Deal volumes

• "

" "! " " " " " " " " " "! # " ! !"!! !!"

PBS Review of the Year

Christie Finance enters its 40th year with an increasing involvement in higher value loans

• Launch of Christie Finance Corporate is followed by securing a

number of mandates on sizeable lending projects

• Business now has an ability to serve diverse range of corporate clients,

with Private Equity source of business now complimenting its more traditional strength in the private client arena

• Focus is on developing position as a premium ‘value-add’ advisory

service

• Average loan size up by 24%, following 80% rise in 2015
• We have developed shorter-term, unsecured lending products
• We have developed shorter-term, unsecured lending products
• Christie Finance wins ‘Commercial Mortgage Introducer of the

Year’ at the Business MoneyFacts Awards for the second successive year

• A clean bill of health from our first FCA audit
• Christie Insurance has continued to do what it does best, providing

bespoke insurance packages which protect clients when they need it

• Opportunity for progression for Christie Insurance lies in

a higher penetration of referrals from within the Group

PBS Review of the Year

Pinders remains a recognised hub of expertise, with national coverage across a range of sectors

• Pinders continue to provide valuation and project management

services across a variety of sectors, with white-coat sectors and Education of increasing prominence

• Their place in the cycle of the transaction process, makes them

a good bellwether for the market place

• The EU referendum led to fewer proposals coming to market in the

lead up to and the immediate aftermath of, the vote

• Nonetheless, average fees held up well and activity levels
• Nonetheless, average fees held up well and activity levels

have rebounded to much improved levels which has continued into 2017

• Lenders have become the dominant source of instructions,

although brokers remain an important factor

• 2016 was notable for the increasing reliance by clients
• n Pinders’ experience and database of knowledge, which

saw increased demand for its expert-witness services to establish historic business values under dispute

SISS Review of the Year

Venners once again delivered solid growth in revenues, while evolving to meet a changing PubCo landscape

• Venners continued to grow market share
• Regional sales were strong, winning new contracts with Punch,

Chapman Group and Enterprise Inns

• At the same time existing clients awarded Venners work

for further brands

• New Brand Reputation Offering – ensuring brand standards
• New Brand Reputation Offering – ensuring brand standards

are adhered to by franchisees - has been enthusiastically received by both existing & aspiring franchisors

• Operational consultancy services continue to enhance

client profits, and have been utilised by clients including Accor, Macdonald Hotels and Rezidor Hotels

• New client wins have included Tortilla, Black and White

Hospitality, Bravo Inns, Arena Racing Company and Cau Group

SISS Review of the Year

2016 saw progress in building a firm foundation for sustained profitability, after a challenging period in retail stocktaking

• Introduction of living wage saw our retail counters benefit from

higher pay which we passed on to clients

• Where price increases were not achieved, we instead obtained

increased work in order to offset the impact

• In Benelux and France we have secured sufficient assignments to

underpin profitability in the region for 2017

• There is sufficient opportunity for new business at good prices to
• There is sufficient opportunity for new business at good prices to

move our German operation into a similar position later in the year

• Supply Chain division is growing its “good faith receiving” audits
• In the ‘bricks and clicks’ retailing era, real-time supply chain control

is fundamental for operators

• A series of contract wins with retailers like Claire’s,

Carrefour and Pandora have confirmed the appeal

• f our pan-European strategy

SISS Review of the Year

Vennersys is gaining momentum with launch of VenPos Enterprise

• Vennersys has achieved the goal of readying its SAAS model

for ‘go lives’ in 2017, including the migration of existing clients such as Blenheim Palace (top right)

• VenPos Enterprise was launched in 2016 to cater for larger
• perators, complimenting the SME-focused VenPos Cloud
• Completion of the existing clients migration process will free up

capacity to accommodate a growing new business pipeline

• New business successes have already included Bristol

Museum and Art Gallery (bottom right), Glenmorangie Distillery, and PlayFactorE (middle)

• The product has multi-lingual capabilities and is internationally

scalable

• It is platform agnostic and is optimised for tablet, mobile and

desktop viewing

One solution, everything covered!

Financial Review

Dan Prickett

Chief Financial Officer

19

Revenue

53%: 47% weighting towards H2 PBS revenues illustrates impact of Brexit, with 14% increase in H2 PBS revenues v H1

2016 2015 Revenue (£'000) H1 H2 Total H1 H2 Total Professional Business Services 16,387 18,646 35,033 17,522 18,743 36,265

46.8% 53.2% 100.0% 48.3% 51.7% 100.0%

• Stock & Inventory Systems & Services

15,188 14,267 29,455 14,216 13,262 27,478

51.6% 48.4% 100.0% 51.7% 48.3% 100.0%

31,575 32,913 64,488 31,738 32,005 63,743

49.0% 51.0% 100.0% 49.8% 50.2% 100.0%

Revenue by Sector

Group remains reasonably evenly spread across the two divisions, and sector-spread provides a diversified risk-spread and plenty of opportunity in newer-subsectors such as Children’s DayCare and Medical

2015 32% 2015 20%

Retail 2016 33% Care 2016 22%

By Sector

2015

PBS 2016 54% SISS 2016 46%

• 32%

2015 48% 20%

Leisure 2016 45%

2015 57% 2015 43%

Operating Profit By Half

H1 trading illustrated impact of Brexit, with activity levels returning to more normalised levels thereafter

500 1,000 1,500 2,000 2,500 3,000

• * Operating profit per half before exceptional items

(1,000) (500)

• 500

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 Period

Six monthly Operating Profit (£'000)

Employee Numbers

FTE headcount increased slightly, reflecting long-term investment strategy and meaning the capacity already exists to deliver growth in the PBS division

Actual number of people employed 2015 2016 Operational 3,323 2,820 Admin & support 259 268 3,582 3,088 Full time equivalents 2015 2016

• Reduction in actual number of people employed reflects reduced staff-turnover in

stocktaking businesses, which itself contributes to improved efficiencies and stronger operating margins

Operational 902 935 Admin & support 259 262 1,161 1,197

Net debt levels at end of 2016 remained well within total available facilities, and with

• perating model able to relatively swiftly convert profitability into cash

Cash

• Group ended the year with net debt of £3.9m (£0.7m) – a £3.2m cash outflow
• Total facility levels are significantly higher & we are operating well within these
• No term debt; entirely overdraft and working capital financing facilities
• 2.3m post-exceptional operating profit absorbed by:

> £0.9m pay down of previously-accrued incentive provisions > £1.0m final salary deficit payments

• >

£1.0m final salary deficit payments > £0.5m higher capex than depreciation > £1.2m of trade receivables increase due to timing of revenues > £0.65m dividends > £1.3m of non-cash exceptional profit in reducing future pension liabilities

• Normalised replacement capex should see capex and depreciation at similar levels
• Some development spend remaining in 2017 on VenPos Cloud product but the

majority of the core development of this has now been done

• Normal operating cash flow expectation should be operating profitability, adjusted for capex,

depreciation, tax, dividends and working capital movements

• Outlook

David Rugg

Chief Executive

Outlook

We are optimistic about the prospects for 2017, while recognising that some uncertainty remains

• 2017 has started much more strongly than 2016
• We entered 2017 with a strong pipeline across our businesses
• Activity levels returned to normal from the end of the summer of ‘16, and we are

now 7 months on with this normalised level of activity continuing

• Geopolitical uncertainty does remain which necessitates some caution, which

we expect to be more pronounced in mainland Europe than in our UK markets

• we expect to be more pronounced in mainland Europe than in our UK markets
• We anticipate some inflationary pressures on our cost base, and we have planned

accordingly

• We plan continued growth in 2017, and the group has sufficient capacity

and operational gearing to deliver improved profit returns as a result

• The Board’s optimism & enthusiasm for 2017 is reflected in it maintaining the

dividend at the same level as 2015, at 2.5p per share (1.5p final dividend payable in July)

• Strictly Private & Confidential