RNS Number : 4598H
Charteris PLC
05 November 2008
CHARTERIS PLC
("Charteris" or "the Company" or "the Group")
PRELIMINARY RESULTS
Charteris plc, the business and IT management consultancy, announces its preliminary results for the year ended 31 July 2008.
Key points
* Strong trading performance ahead of management expectations with total revenues up by 23% to �23.4m (2007: �19.0m)
* Profit before taxation was �1.35m (2007: �0.40m)
* Growth driven by strong on-line retail performance and steady increase in public sector related work
* Profit before taxation and share-based payment charges was �1.39m (2007: �0.45m)
* Operating margin was 5.6% (2007: 2.2%)
* Total cash balance at 31 July 2008 was �2.9m (2007: �1.6m)
* Diluted EPS before share-based payment charges 2.29p (2007: 0.74p)
* Dividend maintained at 0.5p per share
Commenting on the results, Cliff Preddy, Chairman, said:
"The overall Charteris business has performed well in the face of volatile markets over the last year as a result of its distribution of
activities across multiple market sectors. In particular the business strengthened its position in the public sector and recorded an
outstanding year within the retail sector working with several on-line market leaders. As a result, Charteris continues to make progress
towards its stated goal of moving into the next tier of business and IT consulting companies."
2008 2007
�'000 �'000
Revenue 23,423 19,024
Profit before tax and share-based payment charges 1,389 446
Profit before tax 1,349 401
Total cash balance 2,912 1,644
Diluted earnings per share before share-based payment charges 2.29 0.74
(pence)
Dividend per share (pence) 0.5 0.5
Press enquiries:
Charteris plc
David Pickering, Chief Executive Tel: 020 7600 9199
Biddicks
Zoe Biddick Tel: 020 7448 1000
Oriel Securities Limited (Nominated Adviser)
Michael Shaw / Emma Ormond Tel: 020 7710 7600
CHAIRMAN'S STATEMENT
In the financial year ended 31 July 2008, Charteris made pleasing progress towards its stated goal of moving into the next tier of
business and IT consulting companies. The first priority of enhancing profitability after a period of earlier investment was achieved and,
alongside this, excellent organic growth was delivered.
Results
Revenue in the year ended 31 July 2008 grew by 23% to �23.4m (2007: �19.0m). Profit before taxation and share-based payment charge was
�1.39m (2007: �0.45m). Diluted earnings per share before share-based payments rose accordingly to 2.29p (2007: 0.74p).
The cash balance at 31 July 2008 was �2.9m (2007: �1.6m), reflecting improved profits.
These annual results are reported for the first time under International Financial Reporting Standards as adopted by the EU ("IFRS").
Dividend
The Directors recommend an unchanged dividend of 0.5p per share for the year ended 31 July 2008. If approved, the dividend will be paid
on 19 December 2008 to shareholders on the register on 28 November 2008.
Market Sectors
Our strategy continues to be built on specialised service offerings in targeted market sectors with the potential for strong growth. Our
key client orientated propositions, which focus on Customer Centricity and the Integrated Enterprise, have continued to provide
opportunities during the year, helping to improve the Company's performance.
Our Public Sector business strengthened considerably through increasing our presence within homeland security and extending our citizen
centricity work in local government. Revenues in this sector grew steadily by 21%. Activity in the legal expert witness area has been in
line with normal activity levels, albeit significantly down on the strong performance in 2007.
Charteris had an outstanding year in the Retail Sector, with significant growth flowing from our work supporting the on-line growth of
several market leaders. Revenues, including those generated from customers in media and services, almost doubled in the year.
Board Composition
Alan Woodward decided to step down from the Board of Charteris on 31 July 2008 for personal reasons. I would like to take this
opportunity to thank Alan for his important contribution to the development of Charteris, particularly since joining the Board ahead of the
Company's admission to AIM in 2000. Alan will continue to make a valuable contribution within the management group in his continuing role as
Head of Commercial and Technology.
Martin Chitty joined the Board as Executive Director with responsibility for Business Development, after the financial year end, on 16
September 2008. Since joining the Company in April 2005, he has headed the Retail, Media and Services practice, a business which has
achieved major growth under his leadership. Martin has also been a key figure in the success which has been achieved in the on-line retail
market and with the Company's Microsoft Classic and Dynamics Enterprise Resource Planning ("ERP") strategy. We were delighted to welcome him
to the Board and look forward to his further contribution to the strategic development of the Company.
Acquisition
After the financial year end, on 22 September 2008, Charteris acquired the entire issued share capital of SIG Consulting Limited ('SIG')
a profitable business solutions consultancy specialising in ERP systems, predominantly based on the Microsoft Dynamics AX platform.
Established in 1994, SIG is a highly respected provider of business solutions, with revenues of in excess of �3m. The acquisition is
expected by the Directors to make a small full year contribution to earnings after taking into account the costs associated with
integration.
Outlook
The overall Charteris business has performed well in the face of volatile markets over the last year, as a result of its distribution of
activities across multiple market sectors. Whilst we continue to see opportunities for growth in several of the sectors that we serve, the
uncertainty in the wider economy is now leading to delays in clients' decision making and award of new contracts. In view of this, we are
ensuring that costs are closely aligned with near to medium term business projections, whilst preserving the strengths of the business. The
financial impact of these various factors will affect profits in the first half and full year results are expected to be lower than the
prior year.
The directors expect a strong balance sheet to be maintained through this period, based on the robust opening position.
Looking further ahead, and particularly following the recent acquisition of SIG, the directors consider that Charteris is well
positioned to make renewed progress as soon as conditions permit.
Cliff Preddy
Non-executive Chairman
5 November 2008
CHIEF EXECUTIVE'S STATEMENT
Charteris has achieved an excellent result this year in changeable and turbulent markets. The recipe for this success has been the
combination of our in-depth experience of technology-enabled business change, delivered through multiple, well established vertical markets
and our focused service lines.
This blend of skills, markets and services has made the business more resilient to unpredictable fluctuations in individual market
sectors and enabled significant growth with enhanced profitability this year.
Our core service lines of Customer Centricity and Integrated Enterprise are designed to enhance the agility of our clients' businesses
in their fast-changing markets. Using standardised framework approaches, these are tailored to provide specialised solutions, to meet
specific business needs. The momentum and focus that we have developed in these service lines has created more repeatable solutions, thereby
driving synergies within our operations.
The service lines are increasingly generating parallel opportunities across the set of vertical market sectors that we serve. Our
Customer Centricity framework has been successfully applied this year in all of our main market verticals: retail, public sector and
services. Also the acquisition of SIG Consulting, completed in September 2008, is a major step forward in our service line strategy. The
depth of experience which SIG Consulting brings in ERP Solutions is highly complementary to our own and will significantly enhance our
Integrated Enterprise service line.
Market sector activity
Public Sector & Legal
Our Public Sector business continues to develop well, concentrating on two principal areas: Local & Regional Government and Homeland
Security.
In the Homeland Security sector, we have experienced increasing demand for Charteris' client advisory skills. We are working at the
heart of a number of the most significant change programmes in the sector. Our presence in this community is expanding both through the
growth of existing key accounts and the development of new relationships with several other departments.
Local authorities face increasing demand from Central government for the provision of better services using fewer resources and at a
lower cost to the taxpayer. This, together with structural and legislative changes, including the emergence of unitary authorities in
England and Wales and the National Outcome Framework in Scotland, create the impetus for action to improve both service delivery and
operational performance. Charteris is active in all of these areas.
Our citizen-centric approach delivers organisational transformation through the improvement of services to the local community as well
as reduction in cost and complexity in their delivery. Early in 2008, Charteris won a flagship contract for Wiltshire County Council,
enabling citizen-centric change in the Department for Community Services. We are now delivering the first proof-of-concept change project.
This work has generated much interest amongst the wider local government community.
In operational performance management, Charteris has helped a number of local authorities to respond to government performance metrics,
including Comprehensive Performance Assessment (CPA) and the Comprehensive Area Assessment (CAA). Our solutions deliver timely and accurate
performance information and enable effective process improvement.
Virtualisation techniques have become increasingly important in performance improvement in the Public Sector - improving mobility in the
working patterns of staff and delivering material savings in energy costs.
As a leader in the related fields of virtualisation and optimisation of IT infrastructure, Charteris' skills have been in considerable
demand. In a major new engagement this year for NHS Greater Glasgow and Clyde, we are implementing a virtualised desktop and data centre
infrastructure for 20,000 desktops across the Greater Glasgow and Clyde region.
Another prominent theme in performance improvement is collaboration amongst the workforce, based on better information sharing and
greater standardisation of business processes. Based predominantly on Microsoft technology, our activities in this area have increased
considerably over the year. Clients include the Improvement Service, West Lothian Council and the Scottish Government's eCARE programme,
which provides a national framework for collaboration across Health, Education, Housing, Social Work and Criminal Justice sectors.
In the Legal Sector, our experts continue to be in demand for some of the most challenging legal disputes in the information technology
domain. They have again acted for leading system integrators and outsourcers, government departments, banks and commercial companies. A
Charteris expert team acted for EDS in its landmark dispute with BSkyB in the Technology and Construction Court earlier this year. The case
lasted over five years and was in court for 10 months. We see further opportunities to build on our excellent reputation in this area by
expanding activities in arbitration and mediation.
Retail
We made excellent progress this year in the retail sector, with strong demand from key accounts in the on-line Retail market, based on
our Customer Centricity proposition in multi-channel retailing. Reported year-on-year on-line retail sales growth in the UK is around 80% -
a stark contrast to the retail market in general. Charteris' multi-channel, integrated business solutions are well positioned to capitalise
on this market opportunity, as well as the continued demand for convergence of product and service across all shopping channels.
Working as eCommerce development partner and programme managers for GAME, the specialist European retailer of video games and consoles,
our work focused on the redevelopment of GAME's primary eCommerce channels in the UK and Continental Europe. The new integrated eCommerce
business solution, which went live in good time for the key pre-Christmas trading window, rapidly demonstrated its capability to outstrip
the competition and drive levels of growth not previously thought achievable.
Work has continued on developing GAME's multi-channel retail capability, including the wider use of back office applications across the
GAME brands and GAME's operations in Europe and Worldwide. By leveraging programme management capability, together with business and
technology skills in multi-channel retailing, Charteris has become one of GAME's most important partners.
Our relationship with a leading high street retailer, working at the heart of one of the industry's largest eCommerce initiatives,
continued to grow. Our role encompassed several major programmes and utilised our full range of capabilities in business change consulting
and technical innovation.
A key component of our Customer Centricity framework is 'Voice of the Customer' consultancy. This provides direct feedback to our
clients on the perspectives, attitudes and needs of their customers. Demand for this service led to several new relationships with high
profile organisations, which in turn led onto the development of business cases for new multi-channel business.
For a major publishing company, we led the development of a new business-to-business web platform for the management of their
exhibitions across the world.
Services
In the Services market, our Microsoft Dynamics based Enterprise Resource Planning ('ERP') business grew substantially over the last
year, confirming the significant growth opportunity that this market represents for flexible ERP solutions. We successfully programme
managed a Dynamics ERP implementation for APCOA Parking, Europe's longest established full service parking management company, and
implemented a system for ArmorGroup International, the multinational security services provider.
During the year we extended our Dynamics offering to include Microsoft's Customer Relationship Management ('CRM') product set and have
seen high levels of interest from clients across all sectors.
In the area of infrastructure consulting we are delighted to have extended our activities with Industrial Services company, Bodycote
plc, working on a range of projects in the year - notably to establish two new European data centres to enable both enhanced IT service
provision across their thermal processing business and the disposal of the company's testing division.
An important aspect of our relationship with Microsoft remains our work in support of their Consulting Services division in a number of
flagship projects. This year these included the Government Gateway, the NHS Common User Interface development and a major MSTV programme
delivering leading edge technology in digital media convergence. The experience of the practical application of the latest Microsoft
technologies that we gain through projects such as these continues to be an important differentiator for Charteris.
In a subdued Financial Services sector, our focus has been on risk and compliance which, along with liquidity, have been the issues
uppermost in the minds of our clients. Our innovative credit, financial and operational risk modelling approach has been well received by a
number of institutions, despite current investment constraints. The most significant example of this was the continuation of our long
partnership with the Corporate Banking division of a leading retail bank. Here, our work on their BASEL II programme, using leading edge
technology to optimise their credit risk modelling process, was selected by Microsoft as one of the two finalists in its category for their
Worldwide Partner of the Year awards.
We now have framework supply agreements in place with four of the UK's top ten retail finance organisations and are engaged at the core
of a significant aggregation programme.
ERP Solutions (SIG Consulting)
In the spring of 2006, Charteris announced its intention to develop an ERP business solutions capability, based predominantly on the
Microsoft Dynamics product set. Capitalising on the major growth market in Microsoft Dynamics, this plan built both on our Integrated
Enterprise client advisory services in mid- and back office business change and on our well established relationship with Microsoft.
Since its inception, our ERP solutions business has achieved good organic growth. However, we realised a need to consolidate our
position in this important growth market and therefore saw this as a priority area for a targeted acquisition, in line with our stated
policy. We were therefore delighted to announce the acquisition of SIG Consulting in September 2008.
SIG is a business solutions consultancy specialising in ERP systems, predominantly based on the Dynamics AX platform in which it is a
Microsoft Gold Partner. The firm has established an excellent reputation, with a blue-chip client base, especially in the logistics and
service sectors.
This acquisition will greatly enhance the capabilities of Charteris in the fast-growing market for business solutions based on Microsoft
Dynamics. Combining the Dynamics expertise and complementary client bases of Charteris and SIG will make the expanded business one of the
leading players in the UK ERP Dynamics market.
Charteris team
This has been another year in which the skills and dedication of the Charteris team have shone through. The demand for change in the
increasingly volatile market conditions faced by many organisations has made close alignment and agility paramount in the relationship
between consultant and client.
Drawing on hard won experience and with great dedication to seeing the job done, our people have worked in close collaboration with
client teams to deliver critical change programmes reliably so as to meet rapidly evolving business needs.
The business results we have attained this year, accompanied as they are by high quality client satisfaction feedback, stand testament
to the accomplishments of the Charteris team. My thanks to everyone for their hard work and commitment in achieving this outcome.
The SIG Consulting team brings still greater depth and range to Charteris. We welcome them to the business and look forward to building
on the strengths of the combined team to create new opportunity for everyone involved.
Looking Ahead
The strong performance of Charteris over the last year demonstrates the effectiveness of the Company's strategic approach in providing
well differentiated, high quality and increasingly repeatable services to clients across a set of vertical market sectors. The next step in
this strategy will be the successful integration of the SIG Consulting business into the Charteris Group, ensuring that opportunities
created by the complementary capabilities of the businesses are fully realised.
Whilst current economic conditions remain uncertain and performance will be affected this year, the actions we have taken in the
development of the Company strengthen its ability to deal with these challenges and ready the business to exploit new profitable growth
opportunities when market conditions improve.
David Pickering
Chief Executive
5 November 2008
FINANCE DIRECTOR'S REVIEW
Overview
Following last year's strategic repositioning and consolidation summarised in the Chairman's report, 2008 has been one of organic
growth. The Group recorded a profit before tax and share-based payment charges of �1.39m (2007: �0.45m), building on the performance
reported at the half year. In line with other AIM quoted companies, the Group has adopted International Financial Reporting Standards and
figures have been re-presented accordingly.
Set out below is an explanation of the key financial elements of the Group's performance.
Trading
The year has seen significant organic growth with the business revenue as a whole growing by 23%, primarily driven by a doubling of our
retail related activities, especially in the on-line and multi-channel areas, and expansion of government related work. The legal expert
witness revenues were in line with historic run rates, albeit lower than last year's strong results. Demand from the financial services
sector, as a consequence of the recent market turmoil, has seen a significant decline in the face of issues within the banking industry and
continues to remain subdued. The operating margin for the year before share-based payments was 5.9% (2007: 2.3%) reflecting the dilution in
administrative overhead costs.
A significant proportion of the revenue growth has been serviced by increased use of short term associates, costs of which are up by
43%, rather than payroll, which has increased by 15.0%. Overall, operating costs increased by 18.7% on 2007, which reflects the increase in
direct costs required to service the higher levels of revenue. General administration expenses have increased by 16% reflecting a higher
investment in marketing and staff training as well as an increase in general costs arising from inflationary pressures and higher staff
numbers. Net interest income reflects the positive cash position compared to the prior year.
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 utilisation of consultants. This has led to staffing levels within certain skill sets being adjusted both up and downwards
to reflect forecast workload as we have gone through the year. Overall, utilisation has been at budgeted levels across most sectors of the
business. Fee rates have remained steady across the business.
Cash flow and Borrowings
The Group's operations generated a positive cash flow of �1.27m which is ahead of profit due to timing differences on bonus payments to
staff, taxation and settlement of certain suppliers. The Group's trade receivable days remained in line with prior year at 58 (2007: 57).
Our cash balance at 31 July was �2.9m compared with �1.6m last year. We paid corporation tax of �0.1m (2007: �0.2m) and paid a dividend of
�0.2m (2007: �0.2m).
Capital expenditure increased to �0.16m (2007: �0.15m) arising from the planned IT asset renewal programme. Additionally, we repaid
�0.19m of our mortgage loan (2007: �0.18m).
The Group has been financed through shareholder funds, retained earnings and a �0.4m (2007: �0.6m) mortgage. The Group has an agreed
overdraft facility with The Royal Bank of Scotland plc of �1.1m (2007: �1.1m) which expires on 30 October 2009.
Post balance sheet events
On 22 September 2008, Charteris acquired 100% of the share capital of SIG Consulting Limited, an ERP consultancy specialising in
Microsoft Dynamics AX. The mortgage was increased to �2.5m over a 15 year term to fund the acquisition. Further details can be found in note
6.
Patrick Carter
Finance Director
5 November 2008
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2008
Notes 2008 2007
Continuing operations �'000 �'000
Revenue 23,423 19,024
_____ _____
Other external charges (4,116) (2,997)
Staff costs (15,045) (13,082)
Other administrative expenses (2,946) (2,533)
______ ______
(22,107) (18,612)
Operating profit before share options charge 1,356 457
Share-based payment charge (40) (45)
Operating profit 1,316 412
Finance income 68 28
Finance costs (35) (39)
Profit before taxation and share-based payment 1,389 446
charge
Share-based payment charge (40) (45)
Profit before taxation 1,349 401
Taxation (443) (142)
_____ _____
Profit for the financial year attributable to 906 259
shareholders of the Parent Company
_____ _____
Earnings per share
Basic 4 2.22p 0.64p
Diluted 4 2.20p 0.63p
A dividend of 0.5p per ordinary share totalling �203,000 was declared and paid in the year ended 31 July 2008 in respect of the
financial year ended 31 July 2007. A dividend of 0.5p per ordinary share totalling �203,000 is proposed in respect of the financial year
ended 31 July 2008.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
2008 2007
�'000 �'000
Profit for the financial year 906 259
Deferred tax, being income recognised 70 21
directly in equity
Total recognised income and expense for the 976 280
year attributable to shareholders of the
Parent Company
CONSOLIDATED BALANCE SHEET
31 JULY 2008
Notes 2008 2007
�'000 �'000
Non-current assets
Goodwill 5,020 5,020
Other intangible assets 43 50
Property, plant and equipment 3,331 3,397
Investments 1 1
Deferred tax asset 60 59
8,455 8,527
Current assets
Trade and other receivables 5,779 4,248
Cash and cash equivalents 2,912 1,644
8,691 5,892
______ ______
Total assets 17,146 14,419
Current liabilities
Trade and other payables (5,979) (4,132)
Current tax liability (459) (123)
Borrowings (201) (191)
Provisions - (7)
(6,639) (4,453)
Net assets less current liabilities 10,507 9,966
Non-current liabilities
Borrowings (210) (401)
Deferred tax liability (217) (300)
Provisions (25) (23)
(452) (724)
Net assets 10,055 9,242
Equity
Called up share capital 430 430
Share premium account 2,544 2,544
Merger reserve 3,573 3,573
ESOP reserve (194) (194)
Other reserve 26 26
Retained earnings 3,676 2,863
Total equity attributable to 5 10,055 9,242
shareholders of the Parent Company
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 JULY 2008
Group
2008 2007
�'000 �'000
Profit before taxation 1,349 401
Adjustments for:
Depreciation of property, plant and equipment 174 169
Amortisation of intangible assets 56 57
Share-based payments 40 45
Net interest (income)/expense (33) 11
______ ______
Operating cash flows before movements in 1,586 683
working capital
Increase in receivables (1,531) (322)
Increase in payables 1,850 718
(Decrease)/increase in provisions (5) 7
______ ______
Cash generated by operations 1,900 1,086
Income taxes paid (120) (182)
Interest paid (35) (39)
Net cash from operating activities 1,745 865
Investing activities
Interest received 68 28
Purchase of property, plant, equipment and (157) (146)
software
Cash used in investing activities (89) (118)
Financing Activities
Dividends paid (203) (203)
Repayment of borrowings (185) (180)
Net cash from financing activities (388) (383)
Net increase in cash and cash equivalents 1,268 364
Cash and cash equivalents at the beginning of 1,644 1,280
the year
Cash and cash equivalents at the end of the 2,912 1,644
year
NOTES:
1. The financial information in this announcement does not
constitute statutory financial statements as defined in section
240 of the Companies Act 1985. Statutory financial statements
for the previous financial year ended 31 July 2007 (prepared in
accordance with UK GAAP) have been delivered to the Registrar of
Companies. The auditors' report on those financial statements
was unqualified and did not contain any statement under section
237(2) or (3) of the Companies Act 1985. The auditors have
indicated that they intend to give an unqualified report, which
will not contain any statement under section 237(2) or (3) of
the Companies Act 1985, on the statutory financial statements
for the year ended 31 July 2008. 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.
2. TRANSITION TO IFRS
The consolidated financial information has been prepared in
accordance with accounting policies which are consistent with
IFRS for the first time and consequently IFRS1, First-time
Adoption of International Financial Reporting Standards, has
been applied. An explanation of how the transition to IFRS has
affected the reported financial position, financial performance
and cash flows of the group is provided in note 9.
IFRS 1 grants certain exemptions from the full requirements of
IFRS in the transition period. The following exemptions have
been taken in this financial information:
* Business combinations - Business combinations that took place
prior to 1 August 2006 have not been restated.
* Property, Plant and Equipment - At the date of transition,
property assets have been valued at deemed cost, based on a
prior revaluation, rather than historic cost.
* Share-based payment transactions - The Group has elected to
apply IFRS 2 Share-based payments only to awards of equity
instruments made
3. DIVIDEND
The Directors recommend that a dividend of 0.5p per share is
payable. Dividends payable to the trustee of the Group's
employee benefit trust are waived under the terms of the trust
deed; the amount of the proposed dividend so waived is �11,584.
If approved, the dividend will be paid on 19 December 2008 to
eligible shareholders on the register on 28 November 2008.
4. EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and numbers
of shares.
2008 2007
�'000 �'000
Profit after tax for the financial year 946 304
before share-based payment charges
Share-based payment charges (40) (45)
Profit after tax for the financial year 906 259
2008 2007
No. of No. of
shares shares
'000 '000
Weighted average number of shares
For basic earnings per share 40,697 40,697
Dilutive effect of share options 569 508
For diluted earnings per share 41,266 41,205
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.
2008 2007
Earnings per share
Basic before share-based payment charges 2.32p 0.75p
Diluted before share-based payment charges 2.29p 0.74p
5 STATEMENT OF CHANGES IN EQUITY
2008 2007
�'000 �'000
1 August 2006 9,242 9,120
Profit for the year 906 259
Share based payments 40 45
Dividends (203) (203)
Deferred tax 70 21
_____ _____
10,055 9,242
6. POST BALANCE SHEET EVENTS
i) Borrowings
On 21 August 2008, the Group drew down a loan for �2,500,000 on a 15 year term secured against its London headquarters building by means
of a mortgage. Interest is payable at 1.5% above base rate. The pre-existing mortgage was rolled into the new mortgage arrangement.
ii) Business combinations
On 22 September 2008, the Group acquired 100% of the share capital of SIG Consulting Limited, a company specialising in ERP consultancy
services, based in Harpenden, UK.
7. This preliminary announcement was approved by the Board on 5 November 2008. Copies of this announcement will
be available on the Company's website: www.charteris.com.
8. The AGM will take place at 10:00am on Wednesday, 17 December 2008 at Charteris House, 39/40 Bartholomew
Close, London, EC1A 7JN.
9. TRANSITION TO IFRS
This is the first year that the group has prepared its consolidated financial statements under IFRS.
The accounting policies set out above have been applied in preparing the financial statements for the year ended 31 July 2008, the
comparative information presented in these financial statements for the year ended 31 July 2007 and in the preparation of the opening IFRS
balance sheet at 1 August 2006 (transition date).
In preparing its opening IFRS balance sheet, the group has adjusted amounts previously reported in financial statements prepared in
accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to IFRS has affected the group's
financial position, financial performance and cash flows is set out in the following tables and notes.
Main changes in the basis of preparation between IFRS and UK GAAP
In accordance with the requirements of IFRS 1, goodwill has been frozen at its brought forward net book value at the date of
transition, and amortisation charged under UK GAAP for the period ended 31 July 2007 has been reversed.
The adoption of IFRS has not had an impact on the amount of cash previously disclosed in the Group accounts under UK GAAP in any of the
periods of account in the financial statements. Cash held by the EBT is no longer included within the Company accounts.
Notes to the reconciliation of equity and income
IFRS 3, Goodwill and other intangible assets -
a The group has elected not to apply IFRS 3 to business combinations prior to 1 August 2006. Accordingly, goodwill has been frozen
at its brought forward net book value at the date of transition, and amortisation charged under UK GAAP for the period ended 31 July 2007
has been reversed (�311,000). Goodwill was assessed for impairment in terms of IAS36, Impairment of Assets, at the date of transition to
IFRS and at 31 July 2007. No impairment losses were recognised.
b Software related assets with a net book value of �55,000 at 31 July 2006 and �50,000 at 31 July 2007 have been reclassified from
Property, plant & equipment to Other intangible assets.
IAS 16, Property, plant and equipment
c In accordance with IFRS 1, the group has applied the exemption available allowing the use of professional valuations at market
value at the transition date as deemed cost. The cumulative adjustment increased the carrying amount of property, plant and equipment as at
31 July 2006 by �1.0m. The depreciation charge in the year ended 31 July 2007 has risen accordingly by �21,000. The deferred tax expense has
also been adjusted by �4,000 to take into account the change in the carrying value of property, plant and equipment.
IAS 12, Deferred tax
d In accordance with IAS 12, deferred tax has been split between assets and liabilities and reclassified as non-current.
Deferred tax assets have increased due to the impact of IFRS 2, Share-based payments, by �nil and �5,000 at 1 August 2006 and 31 July
2007 respectively. Corresponding adjustments have been made to the taxation charge in those periods of �nil and �3,000 respectively.
Deferred tax liabilities have increased by �301,000 at 31 July 2006 and �281,000 at 31 July 2007, reflecting the revaluation of property
assets as described in note 5c) above.
Consolidation
e In accordance with SIC 12, the ESOP trust is consolidated at Group level and not at Company level as previously required under UK
GAAP.
Reconciliation of equity 1 August 2006
GROUP COMPANY
Notes 2006 under Adj 2006 2006 under Adj 2006
UK GAAP under UK GAAP under
IFRS IFRS
�'000 �'000 �'000 �'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment b.c 2,525 948 3,473 2,525 948 3,473
Goodwill 5,020 - 5,020 2,400 - 2,400
Other intangible assets b - 55 55 - 55 55
Investment in subsidiaries - - - 440 - 440
Deferred tax asset 74 - 74 74 - 74
Available-for-sale investments 1 - 1 1 - 1
Current assets
Trade receivables 3,599 - 3,599 3,595 - 3,595
Other current assets e 325 - 325 325 204 529
Cash and cash equivalents e 1,280 - 1,280 1,273 (15) 1,258
-------- -------- -------- -------- -------- --------
Total assets 12,824 1,003 13,827 10,633 1,192 11,825
Equity and liabilities
Equity attributable to equity
holders of the parent
Ordinary shares 430 - 430 430 - 430
Share premium 2,544 - 2,544 2,544 - 2,544
Merger reserve 3,573 - 3,573 - - -
Other reserve e 26 - 26 26 - 26
Retained earnings 2,039 702 2,741 2,992 697 3,689
ESOP Reserve e (194) - (194) (194) 194 -
-------- -------- -------- -------- -------- --------
Total equity 8,418 702 9,120 5,798 891 6,689
Non-current liabilities
Non-current borrowings 591 - 591 591 - 591
Deferred tax d 29 301 330 29 301 330
Non-current provisions 23 - 23 23 - 23
Current Liabilities
Trade and other payables 3,415 - 3,415 3,844 - 3,844
Current portion of non-current 180 - 180 180 - 180
borrowings
Current tax payable 168 - 168 168 - 168
Current provisions - - - -
-------- -------- -------- -------- -------- --------
Total Liabilities 4,406 301 4,707 4,835 301 5,136
-------- -------- -------- -------- -------- --------
Total equity and liabilities 12,824 1,003 13,827 10,633 1,192 11,825
==== ==== ==== ==== ==== ====
Reconciliation of equity 31 July 2007
GROUP COMPANY
Notes 2007 under Adj 2007 2007 under Adj 2007
UK GAAP under UK GAAP under
IFRS IFRS
�'000 �'000 �'000 �'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment b,c 2,461 936 3,397 2,461 936 3,397
Goodwill a 4,709 311 5,020 2,269 131 2,400
Other intangible assets b - 50 50 - 50 50
Investment in subsidiaries - - - 440 - 440
Deferred tax asset d 54 5 59 54 5 59
Available-for-sale investments 1 - 1 1 - 1
Current assets
Trade receivables 3,906 - 3,906 3,906 - 3,906
Other current assets e 342 - 342 342 205 547
Cash and cash equivalents e 1,644 - 1,644 1,644 (16) 1,628
-------- -------- -------- -------- -------- --------
Total assets 13,117 1,302 14,419 11,117 1,311 12,428
Equity and liabilities
Equity attributable to equity
holders of the parent
Ordinary shares 430 - 430 430 - 430
Share premium 2,544 - 2,544 2,544 - 2,544
Merger reserve 3,573 - 3,573 - - -
Other reserve e 26 - 26 26 - 26
Retained earnings 1,843 1,020 2,863 2,963 835 3,798
ESOP Reserve e (194) - (194) (194) 194 -
-------- -------- -------- -------- -------- --------
Total equity 8,222 1,020 9,242 5,769 1,029 6,798
Non-current liabilities
Non-current borrowings 401 - 401 401 - 401
Deferred tax d 18 282 300 18 282 300
Non-current provisions 30 (7) 23 30 (7) 23
Current Liabilities
Trade and other payables 4,132 - 4,132 4,575 - 4,575
Current portion of non-current 191 - 191 191 - 191
borrowings
Current tax payable 123 - 123 133 - 133
Current provisions - 7 7 - 7 7
-------- -------- -------- -------- -------- --------
Total Liabilities 4,895 282 5,177 5,348 282 5,630
-------- -------- -------- -------- -------- --------
Total equity and liabilities 13,117 1,302 14,419 11,117 1,311 12,428
==== ==== ==== ==== ==== ====
Reconciliation of profit for the year ended 31 July 2007
GROUP
Note Under Adjs Under IFRS
UK GAAP
�'000 �'000 �'000
Continuing operations
Revenue 19,024 - 19,024
Other external charges (2,997) - (2,997)
Staff costs (13,082) - (13,082)
Administrative expenses a,c (2,827) 294 (2,533)
______ _____ ______
Operating profit 118 294 412
Finance income 28 - 28
Finance costs (39) - (39)
______ _____ ______
Profit before tax 107 294 401
Income taxation (145) 3 (142)
______ _____ ______
(Loss)/profit for the financial year (38) 297 259
===== ===== =====
Material adjustments to the cash flow statement
Income taxes of �182,000, paid in the period to 31 July 2007, are classified as operating cash flows under IFRS but were included in a
separate category of tax cash flows under UK GAAP. There are no other material differences between the cash flow statement presented under
IFRS and the cash flow statement presented under UK GAAP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKQKNDBDBFDK
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