Final Results

RNS Number:0346V
Chelford Group PLC
18 April 2007


FOR IMMEDIATE RELEASE                                             18 April 2007
                         

                               Chelford Group plc

                    RESULTS FOR THE YEAR TO 31 DECEMBER 2006

Chelford Group plc ("Chelford" or the "Group"), the specialist IT solutions
group, announces its audited results for the year to 31 December 2006. These
results are reported under IFRS.


Key points:

* The financial results for the period were:

  o  Revenue up 29% to #18.6m (2005: #14.5m);

  o  Adjusted profit before tax*: #1.02m (2005: #1.44m)

  o  Profit before tax: #0.55m (2005: #1.37m); and

  o  Adjusted basic earnings per share**: 9.83p (2005: 17.12p).

     * stated before tax, amortisation of intangibles and share-based payments

     ** stated before deferred tax, amortisation of intangibles and share-based
        payments

* Strong cash generation resulted in net cash of #1.45m (2005: #0.87m)
  after investing a net #0.61m in acquisitions during the period.

* Results reflect a cost over-run on a fixed price contract and certain
  customers delaying the signing and implementation of new contracts.

* New and significant customers signed in the period include Almac
  Sciences, Kettle Produce, George Adams, Eurodix, Isle of Man Creameries,
  Wrights Pies, West Coast, Baxter's Healthcare, Suzuki, Findel, Neopost,
  Taylors of Harrogate, Henry Schien, La Doria, RC2 and Wilts Electrical.

* Following the acquisitions during 2005, new reporting structure as
  Chelford Solutions and Chelford SAP Solutions.

On outlook, William Birkett, Chelford's Chairman stated:

"Orders received in the first quarter are encouraging. As a result of
strengthened management and tighter controls, the Board is confident of the
prospects of the Group for 2007 and anticipates a satisfactory outcome for the
full year."



For further information, please contact:

Trevor Lewis, Chief Executive                            today: 020-7367-8888
                                                     thereafter: 01256-685400

Mark Taylor, Charles Stanley                                    020-7149-6000
Securities

Steve Liebmann, Bankside                        020-7367-8883 or 07802-888159



About Chelford

Chelford Group plc, the IT solutions group is headquartered in Basingstoke,
Hampshire and its shares are quoted on AIM ( stock code: CHR). Chelford provides
specialist systems solutions for its target markets based upon its own IPR, SAP,
Microsoft and RFID technologies.


                              CHAIRMAN'S STATEMENT

INTRODUCTION

2006 was a year of strong growth in revenues, but operating profit before
amortisation and share-based payments were lower than the previous year. The
prime reason for the reduction in operating profit was a significant cost
over-run on a fixed-price SAP contract, as set out in the 2006 half-year
results. This was compounded by certain customers delaying the implementation of
newly signed contracts and by decision delays impacting the signing of new
business.

New project management resource and controls were introduced into the SAP
Division during 2006 to resolve the cost over-run issue; these have taken effect
and the Division is well placed to capitalise on its continuing growth in
revenue.

During the year, Chelford reinforced the quality and scope of its product and
service offerings by achieving Microsoft Gold Partner status for the Group and
meeting the requirements for Gold Partner status in SAP's new Channel programme.
Chelford Solutions continues to improve its competitive position in its target
markets, with the TROPOS ERP solution now being aimed at a wider range of Food
and Drink companies and with the broadening of the markets into which the RF
(Radio Frequency) Supply Chain solutions are sold. The company continues to
increase its exploitation of Microsoft technologies, with an increased emphasis
on Business Intelligence and Business Collaboration solutions.

FINANCIALS

Group revenues for the year increased by 29 per cent to #18,625,000 (2005:
#14,494,000). Organic growth was 12 per cent and there was a full contribution
from Agility Systems and Shian which were acquired during the second half of
2005. Earnings before tax, amortisation of intangibles and share-based payments
were #1,023,000 (2005: #1,435,000). Intangible amortisation was #474,000 (2005:
#136,000). The profit before tax was #547,000 (2005: #1,367,000). Basic earnings
per share were 1.03p (2005: 17.98p) and earnings per share before deferred tax,
amortisation of intangibles and share-based payments were 9.83p (2005: 17.12p).

The Group continues to be debt-free and cash generative, with year-end net cash
of #1,453,000 (2005: #869,000) after a net payment #612,000 in deferred
consideration on acquisitions (2005: #2,539,000).

STRATEGY

The Group is committed to a strategy of developing its business by organic
growth and through acquisitions. The results for 2006 show continued strong
revenue growth and increased penetration of our core ERP and Supply Chain
markets. The Group has the potential for further organic growth and continues to
seek complementary acquisitions.

The Group is now reporting as two operating divisions: Chelford Solutions,
incorporating SSI, Agility, RFID Solution Centre and Chelford Solutions for
Microsoft, and Chelford SAP Solutions reflecting the integration of the Shian
SAP operation with the SAP Division. Within this new reporting structure, the
senior management team will be strengthened to drive the Group forward.

STAFF

The Group employs over 160 people at its offices in Basingstoke, Darlington and
Glasgow. I would like to extend my thanks to the management team and staff for
their continued commitment, in overcoming some difficult issues, to take the
business forward during the year.

OUTLOOK

In 2007, the Group will continue to develop its operating divisions by bringing
to market the new product and service offerings developed in 2006, pursuing new
business opportunities in its target markets and taking advantage of the
excellent opportunities available within its customer base.

Orders received in the first quarter are encouraging. As a result of
strengthened management and tighter controls, the Board is confident of the
prospects of the Group for 2007 and anticipates a satisfactory outcome for the
full year.

William Birkett
Chairman


                            CHIEF EXECUTIVE'S REVIEW

GROUP DEVELOPMENT

The Group has invested in strengthening its product and support services during
the year, creating new opportunities in all target markets and improving the
scope of the solutions offered to customers and new business prospects.

During 2006 the Group's marketing activities have been consolidated, using Group
market intelligence to improve the focus of new business.

With the full integration of the Shian SAP operation into the Group SAP
Division, SAP Help Desk and Support services have been consolidated in the
Glasgow Support Centre to deliver greater efficiencies. The Glasgow Support
Centre now provides a full range of services at competitive commercial rates,
including Help Desk, consultancy and training.

Following the Group achieving Microsoft Gold Partner status, significant
development activity has taken place in integrating new Microsoft technologies
into the products which incorporate Chelford's own IPR.

CHELFORD SOLUTIONS

In 2006, Chelford Solutions achieved 17 per cent growth in revenue to
#10,520,000 (2005: #8,960,000) with operating profit before tax, amortisation
and share-based payments, of #1,087,000 (2005; #1,379,000). Operational
performance was impacted by customer delays in implementing new contracts which
had been signed and decision delays on new opportunities, both of which
contributed to reduced consultant utilisation and profitability. Performance was
also affected by the RFID market developing more slowly than anticipated at the
beginning of the year. Although there is significant interest in this
technology, it has yet to turn into commercial projects. As a consequence, the
cost base was reduced during the year in line with current demand.

Further investment was made in developing the TROPOS Enterprise and Supply Chain
solution. This was focused on meeting the needs of its target markets and in
extending its reach into smaller food and drink companies. The company's RF
(radio frequency) supply chain products have been re-developed in Microsoft.net,
giving faster solution configuration and easier support, thereby increasing
competitiveness.

The Managed Services operation was strengthened further through the newly
introduced 24x7 support and managed EDI services enabling a more comprehensive
service to be offered to customers.

New Microsoft services have also been introduced, focusing on Business
Collaboration and Business Intelligence with the potential to take the Group
into new markets.

During the year significant new contracts were signed with Almac Sciences,
Kettle Produce, Firth Rixson, Adams Pork Products, Eurodix, Isle of Man
Creameries, Wrights Pies, Henry Schein, Taylors of Harrogate, West Coast, Baxter
Healthcare and Suzuki.

SAP DIVISION

The SAP Division continued its strong growth with revenues up 46 per cent at
#8,105,000 (2005: #5,534,000). Operational issues caused the Division to incur
an operating loss before amortisation of #89,000 (2005 operating profit:
#56,000), reflecting a significant cost over-run on a fixed-price contract and
project delays due to customer implementation delays in new contracts which had
been signed. In turn, this impacted consultant utilisation and profitability.
The new project management and control processes implemented in 2006 are taking
effect, with operating performance improving. There was no development costs
capitalised in 2006 (2005: #355,000).

During the year, the SAP Division and Shian SAP operations were merged, with the
Basingstoke Help Desk and Support Service consultancy moving to Glasgow.

The SAP Division is focused on the wholesale & distribution and consumer
packaged goods market sectors with All-in-One SAP qualified solutions in
healthcare, multi-channel sales, consumer products, high tech and grocery
distribution. Significant contract wins were achieved in the period at Findel,
Neopost, Wright Health Group, La Doria, RC2 and Wilts Wholesale Electrical. In
addition to these new contracts, the Division continued to win new maintenance
and general service customers and now supports more than forty customers. The
customer base offers significant opportunity for process improvement programmes
and is a major contributor to business growth.

During the year, a relationship was established with a leading Indian off-shore
services company, with which we have partnered successfully on a major project.
This partnership offers the opportunity for blended rates for development which,
in turn, improves the competitiveness of the Division's offerings in the
marketplace.

In 2007, SAP is releasing a new product together with appropriate Best Practice
solutions for specific markets. Chelford will use this new product to complement
its existing portfolio of pre-configured SAP All-in-One solutions and to review
the potential for entry into additional micro-vertical markets. Also in 2007,
SAP is introducing a new Channel Partner programme, Partner Edge, where Chelford
has qualified for the highest level of partnership, with Gold Partner status
offering improved discounts, co-operative marketing funds and
partnership-selling into major accounts.

During 2007, we will continue to focus on improving operational performance and
investing in strengthening delivery management and delivery capacity.

OUTLOOK FOR 2007

With a clear focus on our target vertical markets, a strengthened product and
services portfolio and improved operational controls, we will continue to drive
organic growth and seek opportunities for complementary acquisitions. Additional
investment in 2007 will strengthen our management teams and further develop
solutions for our target markets and our customer base.

The Group has significant opportunities for growth and we look forward to
performance improvement in 2007.


Trevor Lewis
Chief Executive


                           FINANCE DIRECTOR'S REVIEW

Financial Performance

2006 revenues increased 29% to #18,625,000 (2005: #14,494,000), including full
year trading from the acquisition of Agility Systems Limited ("Agility") of
#1,773,000 (2005: #909,000) and Shian Limited ("Shian") of #1,878,000 (2005:
#265,000) made in August and November 2005 respectively. Organic growth from the
existing operations in the year was 12.41% (2005: 12.38%)

Operating profit before amortisation and share based payments decreased by 29%
to #1,023,000 (2005: #1,435,000). The major reason for the decline in
profitability in 2006 was as a result of a significant overrun on a SAP fixed
price contract, as detailed in the CEO's report.

Taxation

The income tax charge for profits earned in 2006 amounted to #345,000 (2005:
342,000), in addition #128,000 has been charged in 2006 relating to deferred tax
liability, and in 2005 a deferred tax asset of #195,000 was recognised.

Share Capital

During the year 32,842 shares were issued under the Group's EMI share option
scheme. The issue of these options increased the share premium account by
#11,000.

Earnings per Share

Basic earnings per share were 1.03p (2005: 17.98p). Earnings per share adjusted
for tax, amortisation of intangibles and share based payments were 9.83p (2005:
17.12p). The 2006 earnings per share have been reduced by the recognition of a
deferred tax liability of #128,000; the 2005 earnings per share were enhanced by
the recognition of a deferred tax asset of #195,000.

Cash Flow and funds

Excluding tax payments and deferred consideration payments, cash generated from
operating activates was #1,900,000 (2005: #1,617,000). Cash generation remains
strong.

Net cash at the end of the year was #1,453,000 (2005: #869,000). During the year
#612,000 was paid in deferred consideration payments for the acquisitions made
in 2005 of Agility Systems Limited and Shian Limited. Other cash outflows in the
year were taxation payments of #627,000 (2005: #131,000), which included both
full payment of corporation tax for 2005 and quarterly payments on account for
2006.

Financial Instruments

The Group's financial instruments comprise cash and overdraft facilities. The
primary purpose of these financial instruments is to provide finance for
operations. The Group does not enter into speculative derivative transactions to
hedge interest rate risk

The Group's policy on interest rate risk is to minimise net interest charges.
Operations are financed through a mixture of retained earnings, bank facilities
and leasing arrangements (mainly operating leases for leasehold premises). The
Group's deposits and borrowings are at a floating rate.

The Group's policy on liquidity risk is to maintain sufficient funding and
committed bank facilities to meet any foreseeable peak in borrowing
requirements. Any short term flexibility required to support working capital is
provided by overdraft facilities. Liquidity risk is monitored regularly through
cash reports, cash forecasts and comparison to budget.

Martin Anderson
Group Finance Director


Consolidated income statement
for year ended 31 December 2006

                                                            2006        2005
                                                            #000        #000

Revenue                                                   18,625      14,494
Cost of sales                                           (11,572)     (8,153)

Gross profit                                               7,053       6,341
Other operating income                                        86          81

Administrative expenses
Before amortisation and IFRS 2 Share option              (6,116)     (4,987)
charges
Amortisation expense                                       (474)       (136)
IFRS 2 Share option charges                                 (25)           -
                                                         (6,615)     (5,123)

Operating profit
Before amortisation and IFRS 2 Share option                1,023       1,435
charges
Amortisation expense                                       (474)       (136)
IFRS 2 Share option charges                                 (25)           -
                                                             524       1,299

Financial income                                              24          72
Financial expenses                                           (1)         (4)

Net financing income                                          23          68

Profit before tax                                            547       1,367

Income tax expense
Current tax                                                (345)       (342)
Deferred tax                                               (128)         195
                                                           (473)       (147)

Profit for the year attributable to equity
holders of the parent
                                                              74       1,220

Basic earnings per share                                   1.03p      17.98p
Diluted earnings per share                                 1.02p      17.63p
Adjusted basic earnings per share                          9.83p      17.12p



Statement of recognised income and expense
for year ended 31 December 2006

                                               Note         2006        2005
                                                            #000        #000

Profit for the year                                           74       1,220

Total recognised income and expense
attributable to equity holders of the parent
                                                              74       1,220


Consolidated balance sheet

at 31 December 2006

                                                             2006        2005
                                                             #000        #000
Non-current assets
Property, plant and equipment                                 483         466
Intangible assets                                           9,136      10,928
Investments in subsidiaries                                     -           -
Other receivables                                               -           -
Deferred tax assets                                           155         197

                                                            9,774      11,591

Current assets
Trade and other receivables                                 5,505       6,322
Cash and cash equivalents                                   1,453         869

                                                            6,958       7,191

Total assets                                               16,732      18,782

Current liabilities
Trade and other payables                                  (5,463)     (5,525)
Income tax payable                                          (216)       (499)

                                                          (5,679)     (6,024)

Non-current liabilities
Trade and other payables                                        -     (1,935)
Deferred tax liabilities                                     (89)         (2)

                                                             (89)     (1,937)

Total liabilities                                         (5,768)     (7,961)

Net assets                                                 10,964      10,821

Equity attributable to equity holders of the parent
Share capital                                               7,141       7,108
Share premium                                               3,337       3,326
Retained earnings                                             486         387

Total equity                                               10,964      10,821



Consolidated cash flow statement
for year ended 31 December 2006
                                                             2006        2005
                                                             #000        #000
Cash flows from operating activities
Profit/(loss) for the year                                     74       1,220
Adjustments for:
Depreciation, amortisation and impairment                     641         276
Financial income                                             (24)        (72)
Financial expense                                               1           4
Taxation                                                      473         147

Operating profit before changes in working                  1,165       1,575
capital and provisions
Decrease in stock                                               -           2
(Increase)/decrease in trade and other                        777     (1,540)
receivables
Increase/(decrease) in trade and other                       (42)       1,580
payables

Cash generated from the operations                          1,900       1,617
Interest paid                                                 (1)         (4)
Tax paid                                                    (627)         131

Net cash from operating activities                          1,272       1,744

Cash flows from investing activities
Interest received                                              64          32
Acquisition of subsidiary                                   (612)           -
Acquisition of subsidiary - net of cash                         -     (2,539)
acquired
Acquisition of property, plant and equipment                (184)        (91)
Development expenditure acquisition of                          -       (355)
intangible assets

Net cash from investing activities                          (732)     (2,953)

Cash flows from financing activities
Proceeds from the exercise of share options                    44           -

Net increase in cash and cash equivalents                     584     (1,209)
Cash and cash equivalents at 1 January                        869       2,078

Cash and cash equivalents at 31 December                    1,453         869



Notes


1. Segmental analysis


Segment information is presented in respect of the Group's business and
geographical segments. The primary format, business segments is based on the
Group's management and internal reporting structure.


Segment results and assets and liabilities include items directly attributable
to a segment. Unallocated items comprise financing income and tax charges.


Segment capital expenditure is the total cost incurred during the year to
acquire segment assets that are expected to be used for more than one period.



Business Segments
                                                    2006

                                    Chelford  Chelford       SAP
                                       Group Solutions Solutions     Total
                                        #000      #000      #000      #000

Revenue                                    -    10,520     8,105    18,625

Operating profit before                    -     1,087      (89)       998
amortisation
Amortisation of intangibles                -     (407)      (67)     (474)

Operating profit                           -       680     (156)       524
Net financing income                                                    23
Profit before tax                                                      547
Taxation                                                             (473)

Profit for year                                                         74

Total Assets                           8,514     4,082     4,136    16,732

Total Liabilities                       (55)   (3,193)   (2,520)   (5,768)

Capital expenditure (including
development expenditure)
                                           -        84       100       184

Depreciation                               -       123        44       167

Research costs expensed                    -       496         -       496



                                                    2005

                                    Chelford  Chelford       SAP
                                       Group Solutions Solutions     Total

                                        #000      #000      #000      #000

Revenue                                    -     8,960     5,534    14,494

Operating profit before                    -     1,379        56     1,435
amortisation
Amortisation of intangibles                -     (128)       (8)     (136)

Operating profit                           -     1,251        48     1,299
Net financing income                                                    68
Profit before tax                                                    1,367
Taxation                                                             (147)

Profit for year                                                      1,220

Total Assets                          10,788     4,373     3,621    18,782

Total Liabilities                    (2,201)   (3,689)   (2,071)   (7,961)

Capital expenditure (including
development expenditure)
                                           -        76       370       446

Depreciation                               -       105        35       140

Research costs expensed                    -       525         -       525



Additional disclosure


The following information, based on trading units, is given as additional
information and is separate to the business segment analysis required by IAS 14
and presented above.

                                             2006

                 Chelford      SSI     SSI       SAP Agility  Chelford
                    Group Holdings Limited Solutions   Group Solutions
                      plc                                          for
                                                             Microsoft   Total
                     #000     #000    #000      #000    #000      #000    #000

Revenue                 -        -   7,881     7,093   1,773     1,878  18,625

Operating profit
before
amortisation            -        -     908     (267)     207       150     998
Amortisation of
intangibles
                        -        -       -      (29)   (373)      (72)   (474)

Operating profit        -        -     908     (296)   (166)        78     524
/(loss)
Net financing                                                               23
income
Profit before                                                              547
tax
Taxation                                                                 (473)

Profit for year                                                             74

Total Assets        8,514       11   2,921     3,872     876       538  16,732

Total                (55)        - (2,498)   (2,417)   (579)     (219) (5,768)
Liabilities

Capital
expenditure
(including
development
expenditure)            -        -      78        15       8        83     184

Depreciation            -        -      91        28      35        16     167

Research costs          -        -     496         -       -         -     496
expensed



Additional disclosure (continued)



                                             2005

                 Chelford      SSI     SSI       SAP Agility  Chelford
                    Group Holdings Limited Solutions   Group Solutions
                      plc                                          for
                                                             Microsoft   Total
                     #000     #000    #000      #000    #000      #000    #000

Revenue                 -        -   7,963     5,357     909       265  14,494

Operating profit
before
amortisation            -        -   1,038        38     330        28   1,434
Amortisation of
intangibles
                        -        -       -         -   (124)      (12)   (136)

Operating profit                     1,038        38     206        16   1,298
Net financing                                                               69
income
Profit before                                                            1,367
tax
Taxation                                                                 (147)

Profit for year                                                          1,220

Total Assets       10,788       17   3,209     3,359   1,002       407  18,782

Total             (2,201)        - (2,901)   (1,921)   (683)     (255) (7,961)
Liabilities

Capital
expenditure
(including
development
expenditure)            -        -      76       370       -         -     446

Depreciation            -        -      98        32       6         2     140

Research costs          -        -     525         -       -         -     525
expensed




Geographical analysis

                                                        Revenue
                                               (by destination of goods)
                                                     2006        2005
                                                     #000        #000

United Kingdom                                     18,045      14,135
Europe                                                490         110
Rest of the World                                      90         249
                                                   18,625      14,494



The Group's geographical segmental results and net assets derived from its
principal activity in Europe and the Rest of the World is less than 10% of the
consolidated results and net assets and is therefore considered not to be
significant to the financial statements.


2. Earnings per share

Earnings per share have been calculated by dividing profit attributable to
shareholders by the weighted average number of shares in issue during the year.
The diluted earnings per share have been calculated using an average share price
of 232p (2005: 226p) for the year.

                                                               2006         2005

      Basic earnings per share                                1.03p       17.98p
      Diluted earnings per share                              1.02p       17.63p
      Adjusted basic earnings per share                       9.83p       17.12p
      Adjusted diluted earnings per share                     9.70p       16.78p

      Earnings per share measures are calculated with
      reference to the below:

      Number of shares
      Basic earnings per share is calculated on the
      weighted average number of shares in issue during
      the period of                                       7,130,546    6,784,383
      Dilution due to share options                          91,630      136,706

      Shares used to calculate diluted earnings per       7,222,176    6,921,089
      share

      Earnings
      Profit for the year attributable to equity             73,562    1,220,000
      holders of the parent
      Amortisation of intangible assets                     474,063      136,000
      Charge for share based payments                        25,104            -
      Deferred taxation charge for year                     128,000    (195,000)

      Profit for the year before amortisation of
      intangibles, charge for share based payments, and
      deferred taxation                                     700,729    1,161,000

      Adjusted basic earnings per share
      Basic earnings per share                                1.03p       17.98p
      Amortisation of intangible per share                    6.65p        2.01p
      Share based payment charge per share                      0.35p          -
      Deferred taxation charge per share                        1.80p    (2.87)p

      Adjusted basic earnings per share before                9.83p       17.12p
      amortisation of intangibles, charge for share
      based payments, and deferred taxation

      Adjusted diluted earnings per share
      Diluted earnings per share                              1.02p       17.63p
      Amortisation of intangible per share                    6.56p        1.97p
      Share based payment charge per share                    0.35p            -
      Deferred taxation charge per share                        1.77p    (2.82)p

      Adjusted diluted earnings per share before              9.70p       16.78p
      amortisation of intangibles, charge for share
      based payments, and deferred taxation


The weighted average number of shares in issue for 2006 has been adjusted to
take into account the share issue of 32,842 shares under the EMI Share Option
Scheme.



3. Financial information

The financial information set out above does not constitute the company's
statutory accounts within the meaning of section 240 of the Companies Act 1985
and are an extract from the Company's statutory accounts on which the auditors
gave an unqualified opinion. The Group's accounts for the period ended 31
December 2006 will be filed with the Registrar of Companies in due course.


The 2005 comparatives are derived from the statutory accounts for 2005 which
have been delivered to the Registrar of Companies and received an unqualified
audit report and did not contain a statement under the Companies Act 1985, s 237
(2) or (3).


4    Annual Report

The Annual Report and Financial Statements will be sent to all shareholders in 
due course.

Further copies will be available to the public from the Company Secretary at 
the Company's registered office, Chelford House, Hampshire International 
Business Park, Crockford Lane, Basingstoke, Hampshire RG24 8WH.




                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
FR UBOBRBSRSAAR