2017 Results Presentation David Rugg Dan Prickett Chairman & - - PowerPoint PPT Presentation

2017 Results Presentation

David Rugg Dan Prickett

Chairman & Chief Executive Chief Operating Officer

Simon Hawkins

Group Finance Director

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2017 Headlines

David Rugg

Chairman & Chief Executive

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2017 Results Presentation

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2017 Headlines

Strong revenue growth particularly in PBS contributed to a significant improvement in operating profit of £3.8m

• Revenue growth of 11.1% to £71.6m (2016: £64.5m)
• Operating profit of £3.8m (2016: £1.1m before exceptional items)
• Earnings per share of 9.47p per share (2016: 5.41p per share)
• Total dividend for the year increased to 2.75p per share (2016: 2.50p per share)
• Strong recovery in revenue and operating profit from the PBS division, with revenue up 15.9% on

the prior year

• PBS operating profit up to £5.3m (2016: £1.7m before exceptional items)
• Stronger revenues from client M&A activity set to continue in 2018
• Challenging year for retail stocktaking within the SISS division
• Improved terms on a number of major UK retail stocktaking contracts should have a positive

impact as we move through 2018

An Introduction to Christie Group

David Rugg

Chairman & Chief Executive

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2017 Results Presentation

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About Us

A leader in the provision of professional business services to the leisure, retail, medical, childcare & education and healthcare sectors ‘We believe that our market 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.’

• Christie

Group

• ffers

a portfolio

• f

professional business services for the leisure, retail, medical, childcare & education and healthcare 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.
• 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.

2017 Results Presentation

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Group Strategy

A client focused approach that leads to best-in-class results Christie Group aligns its strategy around a number

• f key focal points as illustrated. Our strategy is

focused on 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

• ur

global reach, maximising synergies across the group and a flexible approach we can deliver best-in-class results for our clients.

• The agreed board objective is to initially

rebuild operating profits to that previously reached £10 million+

• 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.

Client Focus Brand Strength & Endurance Financial Stability

2017 Results Presentation

Professional Business Services (PBS)

Christie & Co is a leading specialist firm providing business intelligence in the hospitality, leisure, healthcare, medical, childcare & education and retail sectors. It employs the largest teams

• f

sector specialists in the UK & Europe providing professional agency, valuation and consultancy services. Christie Finance has 40 years’ experience in financing businesses in the hospitality, leisure, healthcare, medical, childcare & education, retail and medical sectors. Christie Finance prides itself on its speed of response to client

• pportunities

and its strong relationships with finance providers. With 40 years’ experience arranging business insurance in the hospitality, leisure, healthcare, childcare & education, 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

• f

their trading potential and value.

Stock & Inventory Systems & Services (SISS)

Orridge is Europe’s longest established stocktaking business specialising in all fields

• f retail stocktaking including high street,

warehousing & factory operations, pharmacy and supply chain services. Orridge prides itself on the speed in supplying high quality management information to its clients. Venners is the leading supplier

• f

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. Vennersys operates in the UK and North America with

• ver

20 years experience delivering online Cloud-based ticketing sales and admission systems to visitor attractions. Examples include historic houses & estates, zoos, safari parks, playcentres and cinemas.

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Our Businesses

Complementary specialist services classified into two divisions

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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 or dispose of a business

• r

asset,

• ur

companies combine to provide support throughout the client lifecycle. Leveraging the synergies that arise from this collaboration within and across companies enhances both revenue generation and profit conversion.

2017 Results Presentation

9 Investment advice

Our Areas of Expertise

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

• Luxury hotels
• Mid-market

hotels

• Upscale hotels
• Budget hotels
• Boutique hotels
• Aparthotels
• Guest houses
• B&Bs
• 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
• Holiday parks
• Golf courses
• Gaming sector
• Elderly care
• Specialist

care

• Private

hospitals

• Nursing and

residential

• Supported

living

• Funeral

directors

• Supermarkets
• Convenience

stores

• PFS

Forecourts

• CTNs
• Off licences
• Post offices
• Garden

centres

• Newsagents
• Pharmacies
• Dentists
• GP Surgeries
• Vets
• Opticians

Hotels

Healthcare

Public Houses

Restaurants Leisure

Medical

Retail

Childcare & Education Childcare & Education

• Education
• Childcare
• Independent

schools

• Nurseries
• Fostering

Estimated Market Sizes - UK Estimated Market Sizes - Europe

• Over 132,000 hotels

(source Otus & co)

• 45,000 hotels
• 49,000 pubs
• 24,000 table service restaurants
• 25,000 healthcare facilities
• 7,700 pharmacies
• 10,700 dental practices
• 2,500 independent schools
• 50,000 convenience stores
• 6,700 health clubs
• 8,900 GP’s
• 16,000 day nurseries
• 8,400 filling stations
• 100,000 + retail

Business Review

David Rugg Dan Prickett

Chairman & Chief Executive Chief Operating Officer

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2017 Results Presentation

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PBS Review of the Year

Rebound in performance translated to a much improved performance from the division

• Christie & Co’s complete market coverage was evidenced by increased

activity from both private and corporate investors

• Regional transactional income grew strongly
• Recruitment

strategy

• f

last three years has begun to come through in productivity of fee earning employees

• Corporate transactional activity much stronger across a number of

sectors

• Some

increase in distress based transactions in certain labour-intensive sectors affected by increases in living wage

• Christie & Co’s sector-embedded valuation teams advised on over

£7.2bn worth of assets in the year

• Our consultancy teams’ business intelligence is highly prized by

potential investors, with

• ur

hotel and healthcare teams particularly prominent

• Strong

investor interest in the UK from Asia during the year, particularly in Childcare & Education

2017 Results Presentation

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PBS Review of the Year

There was increased activity in almost every sector, accompanied by rising average prices

• Consolidation was a key feature in the dental sector in 2017, with our

agency team completing

• ver

£90m worth

• f

transactions and undertaking more than 350 dental practice valuations

• Pharmacy team experienced a record increase in sales with funding

widely available for the sector

• It was a strong year for our healthcare business, with activity at levels

not seen since pre financial crisis, strong demand for strategic advisory services and a surge in new development activity

• Within Retail, the petrol station forecourt market continues to evolve

with our presence in the sector seeing us transact or value almost 25%

• f UK independently owned & operated petrol stations
• Hotel

team is active across Europe, expanding cross-border work and developing a more integrated offering

• Christie & Co are market leaders in Childcare & Education
• Separate division created in 2017
• Advised on nearly £2bn of nursery & education assets in the year
• International respect of UK education is fuelling interest in the

sector, leading to co-branding & partnership opportunities

2017 Results Presentation

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Average values

Sale prices continued to climb through 2017 in the majority of sectors Index based on average sale prices

From a base of 100 in 1975

2017 Results Presentation

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Average Commissions

Average commission levels fell in the first half of 2017, but improvement considerable in the second half

6 8 10 12 14 16 18 20 22 24 Value (£'000) Period

Christie & Co UK Average Commission 13 Week Average

2017 Results Presentation

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UK Transactional Income

2017 has seen a significant increase in transactional income moving back towards 2007 levels

Year

UK Transactional Income

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UK Deal Volumes (“Gross Deals Agreed”)

10 15 20 25 30 35 40 45 50 55

Units Period

Christie & Co UK GDA 13 Week average

2007-2018 1989-1996 1996-2001

2017 saw transaction volumes improve but still half that seen at the peak; no evidence to us, however, of market sizes diminishing

2017 Results Presentation

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PBS Review of the Year

Financial services income continues to grow, continuing trend of last five years

• Christie Financial Services created to provide further scope to market

and expand our financial services offering

• This follows the launch in 2017 of Christie Finance Corporate and

Christie Finance Unsecured

• Conditions in the commercial finance market remain positive, and we

worked with over 50 lenders in the year

• As well as our core UK presence, we assisted international investors

from Singapore and the US

• Christie Finance has achieved double-digit growth every year since

2013 and we continue to invest in people and processes to drive further growth

• Christie Insurance remains ideally placed to advise on commercial

insurance needs for Christie & Co and Christie Finance clients

• Each year over 85% of Christie Insurance clients renew with us
• Cyberrisks and data protection are adding to the business risks that

clients are seeking to insure through us

2017 Results Presentation

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PBS Review of the Year

Pinders enjoyed an excellent year in 2017 combining appraisal work with specialist advice & consultancy

• UK lenders returned to the market in 2017
• Alongside this, Pinders own reputation for high-quality specialist

advice attracted some substantial consultancy assignments

• Pinders continues to resist reductions in average fees, continuing

the significant progress achieved in the last few years

• Overall, average fees increased in 2017, despite an increasing

volume

• f

simpler, lower fee white coat valuations reflecting Pinders standing in an attractive sector for lenders

• Appraisal volumes were up in every specialist sector apart from

leisure and hospitality

• Continuing prominence in the education sector
• Pinders

consultancy team advised

• n
• ver

£1bn

• f

education assets in the year

• Pinders

remain market leaders in healthcare, having been

• ne of the UK’s leading care home valuers for over 40 years

2017 Results Presentation

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SISS Review of the Year

Strong demand for Venners services continues as it remains the UK market leader in food & beverage stocktaking

• Venners continued to grow revenues from unprecedented demand
• Key to maximising revenues lies in Venners efficient training of

skilled stocktakers with recruitment progressing well in 2018

• Turnover has doubled in the last seven years and staff numbers

have grown accordingly but demand continues to underpin further growth aspirations

• Technology remains at the forefront of the business: 2017 saw the

migration of our internal stocktaking technology to a cloud-based platform

• We are broadening and deepening management structure to push

decision-making closer to clients

• New customers in the year included Amber Taverns, Laine Pubs

and Malmaison Hotels, alongside increased work from Greene King, Enterprise Inns (E.I Group) and Bespoke Hotels

2017 Results Presentation

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SISS Review of the Year

After a difficult period in UK retailing, indications are

• f

a return to sustainable and profitable pricing of stocktaking contracts

• 2017 remained highly competitive in the UK retail environment, but

with some encouraging and significant success in key negotiations as we ended 2017

• The result is an expectation of improved profitability in 2018
• In mid 2017, a 800-store UK retailer returned within months to

Orridge after unsuccessful experience

• f

competitor with a lower-priced tender

• In our Supply Chain division we won work with Boots and Poundland

in 2017 and we anticipate additional work in 2018. Additionally, the Supply Chain division who a contract with Co-Op food, a key client win for the division as it pursues growth

• Strength in Pharmacy stocktaking provides opportunity to benefit

with particular focus on high margin smaller clients and GP surgeries

• Our European presence continues to strengthen, with significant

additional work from Claire’s and Carrefour, alongside new wins like Hugo Boss, Maison du Monde and Intermarche

2017 Results Presentation

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SISS Review of the Year

Vennersys now moves into sales-focus period following successful migration and development phases

• Priority in 2017 was the complete migration of all larger legacy

Venpos users to the cloud – that has been achieved

• Principal development phase is now completed meaning 2018 sees

a shift from migration & development to focus on revenue growth

• Development is now focused on extension of functionality aided

by its modular design

• Now targeting specific sectors - play centres, farm attractions,

historic houses, museums as well as having an affinity group in Scotland – with over 13,000 sites in these & related sectors

• Client successes and wins in these sectors include 360 Play, Walby

Farm Park, Active Tameside, Bentley Priory Museum and The National Wallace Monument

• Alongside strong functionality for clients, the system is resilient –

GDPR compliance has been combined with 99.999% availability, PCI certification, protected source code and has been subjected to independent penetration testing

One solution, everything covered!

Financial Review

Simon Hawkins

Group Finance Director

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2017 Results Presentation

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Revenue

52%:48% weighting towards H2 PBS revenues illustrates a strong second half to 2017, with a 9.5% increase (£2.0m) in H2 PBS revenues v H1. YOY revenue increased by £7.1m (11.1%)

2017 2016 H1 H2 Total H1 H2 Total Revenue £'000 £'000 £'000 £'000 £'000 £'000 Professional Business Services 19,297 21,320 40,617 16,387 18,646 35,033

PBS revenue phasing 47.5% 52.5% 100% 46.8% 53.2% 100%

Stock & Inventory Systems & Services 15,628 15,390 31,018 15,188 14,267 29,455

SISS revenue phasing 50.4% 49.6% 100% 51.6% 48.4% 100%

Total Revenues 34,925 36,710 71,635 31,575 32,913 64,488

Total revenue phasing % 48.8% 51.2% 100% 49.0% 51.0% 100%

Total YOY movement 3,350 3,797 7,147

Total YOY movement % 10.6% 11.5% 11.1%

2017 Results Presentation

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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 Childcare & Education and Medical

2016 54% 2016 46%

PBS 2017 57% SISS 2017 43%

2016 33% 2016 45% 2016 22%

Retail 2017 32% Leisure 2017 42% Care 2017 26%

Notes

• Care includes healthcare, childcare, education and medical
• Leisure includes hotels, pubs, restaurants and leisure

See slide 7 for a full breakdown of areas within each sector

2017 Results Presentation (£1,000) (£500) £0 £500 £1,000 £1,500 £2,000 £2,500 £3,000 £3,500 £4,000 £4,500 2013 2014 2015 2016 2017 £000's

Operating profit before exceptional items

H1 H2 Total

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(17%) 117% 78% 22% 46% 54% 179% (79%) 27% 73%

Operating profit by half years – last 5 years

Trading followed historical trends with a significant stronger 2nd half operating profit performance of £2.7m

2017 Results Presentation

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Operating profit from continuing operations

The agreed board objective is to initially rebuild operating profits to that previously reached £10 million+ from continuing operations as achieved in 2007

(£4,000) (£2,000) £0 £2,000 £4,000 £6,000 £8,000 £10,000 £12,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Operating profit before exceptionals* £'000’s Year

Operating profit before exceptionals from continuing operations only

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Employee numbers

FTE headcount increased slightly, reflecting long-term investment strategy, however the capacity already exists to deliver growth in the PBS division in 2018

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

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

• Growth in FTE’s is as a result of continued investment particularly in the PBS businesses as we continue

to target growth

Actual number of people employed 2017 2016 Operational 2,773 2,820 Admin & Support 284 268 Total 3,057 3,088 Full time equivalents (FTE's) 2017 2016 Operational 939 935 Admin & Support 275 262 Total 1,214 1,197

2017 Results Presentation

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Net debt levels at end of 2017 remained well within total available facilities, and with the operating model able to relatively swiftly convert profitability into cash. Ended 2017 with positive cash & cash equivalents

Cash

• The Group ended the year with positive cash & cash equivalents of £0.2m (£2.9m overdraft)
• Net debt at the end of the year was £2.6m (£5.7m) – a £3.1m reduction in the year as a result of strong

cash generation

• This reduction in net debt of £3.1m, illustrates the fact that our operational gearing quickly turns
• perating profit into operating cashflow swiftly
• Total banking facility levels are significantly higher & we are operating well within these facilities
• £1.0m investment in replacement capital expenditure which will yield positive returns for the business in

future years and should see capex and depreciation at similar levels

• Some

development spend remaining in 2018

• n

VenPos Cloud product but the majority of the core development of this has now been done

• Normal
• perating

cash flow expectation should be

• perating

profitability, adjusted for capex, depreciation, tax, dividends and working capital movements

Outlook

David Rugg

Chairman & Chief Executive

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2017 Results Presentation

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Outlook

We are optimistic about the prospects for the current year having rebounded in 2017 and with strong demand for our services as we move through 2018

• 2018 has started well for our core activities & stronger than 2017
• We entered 2018 with a healthy pipeline across our businesses
• Within PBS division, we have a good volume of client M&A transactions in progress assignments
• We anticipate H1 2018 being significantly ahead of H1 2017
• Brexit is, in our view, unlikely to affect demand for the businesses we sell or services we

provide

• In SISS, encouraging progress has been made re pricing negotiations in retail stocktaking

while Vennersys has broadly completed its development phase

• Dividend for the year increased to 2.75p per share (2016: 2.50p per share)
• Improved dividend cover* of 3.44 (2016: 2.16)

*Dividend cover calculated as basic eps / dividend

Strictly Private & Confidential

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