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Fletcher King PLC (FLK)

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Friday 20 December, 2019

Fletcher King PLC

Half-year Report

RNS Number : 5510X
Fletcher King PLC
20 December 2019
 

FLETCHER KING PLC

 

Interim Results for the 6 months ended 31 October 2019

 

 

Financial Highlights

 

                  Turnover  :           £1,331,000               (2018: £1,465,000)

                 

                  PBT          :           £108,000                  (2018: £132,000)

 

                  Basic EPS :           0.90p per share       (2018: 1.13p per share)

 

                  Dividend   :           1.00p per share       (2018: 1.00p per share)

 

 

Operational Highlights

·    Performance was lower than the comparative period last year and continued to reflect the subdued property market associated with uncertainties over Brexit and the UK political situation.

·  Steady and predictable revenue from asset management clients provides ongoing support for the business along with a regular supply of valuation instructions from lending banks.

·   A reasonable volume of sales instructions were completed in the period but revenue from rating appeals remained lower than normal due to the slow processing of appeals by the Valuation Office Agency.

Commenting on the results David Fletcher, Chairman of Fletcher King said:

"We had a reasonable first half and I am pleased that we are able to report a profit, albeit at a lower level than previous years, and to maintain our interim dividend at the same level as last year. My year-end statement warned of the potential difficulty in maintaining profitability in a volatile market and that situation continues."

 

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

ENQUIRIES:

 

Fletcher King Plc

David Fletcher

Tel: 020 7493 8400

 

Cairn Financial Advisers LLP (Nomad)

James Caithie / Tony Rawlinson

Tel: 020 7213 0880

 

The interim results are available on the Company's website: www.fletcherking.co.uk

 

CHAIRMAN'S STATEMENT

 

Results

 

Turnover for the period was £1,331,000 (2018: £1,465,000) with a profit before tax of £108,000 (2018: £132,000).

 

Your Directors have declared an interim dividend of 1.0p per share (2018: 1.0p per share) to be paid on 14 February 2020 to shareholders on the register at the close of business on 17 January 2020.

 

The Commercial Property Market

 

The first half of the year was dominated by the uncertainties over Brexit and the UK political situation with sales and lettings severely impacted as both tenants and buyers understandably held back on decision making. During the period, investment into commercial property was at a five year low and continued to decline. The situation was graphically illustrated by M&G suspending redemptions in their £2.5 billion property fund due to an inability to sell enough property to satisfy investor withdrawals. 

 

The one bright spot in the market was the City office market where demand for large spaces outstrips supply and rents have been rising.

 

Business Overview

 

In my year end statement I warned of the potential difficulty in maintaining profitability in such a volatile market. I am therefore very pleased that we are able to report a profit in the first half of the year albeit at a lower level than previous years and to maintain our interim dividend at the same level as last year.

 

Business has generally been slow although property management continues steadily with some further small mandates won.

 

As might be expected our investment business suffered during the period. A number of good sales were successfully concluded but there were no purchases.

 

Valuation instructions held up well although slightly below the level in the same period last year. Rating continued to be challenging but the outlook for the second half is more optimistic.

 

Outlook

 

The Government's success in achieving a substantial overall majority in the General Election has, at long last, removed the major uncertainty of Brexit, although there remain difficult negotiations ahead on the terms of our future relationship with Europe.

 

Although uncertainties over the exact terms of our withdrawal from Europe will potentially impact decisions in the commercial property market, we expect both tenants and investors to be more positive in their decision making.

 

Asset management is likely to continue to provide a steady income flow and we are hopeful of securing further new instructions in the coming months.

 

We have some investment sales instructions that should come to fruition before the year end and we will look to acquire properties for our inhouse clients.

 

Assuming the banks continue to lend on property, we expect a reasonable flow of valuation instructions.

 

Rating income will continue to be influenced by the willingness of the Valuation Office to engage in Rating Appeals. We have a number of significant appeals in the pipeline and we would hope to get a percentage of those agreed during the second half of the year.

 

Although the political climate is now clearer, it remains hard to predict the final outcome for the rest of the year and our previously stated views on the difficulty in maintaining profitability remain.

 

DAVID FLETCHER

CHAIRMAN

20 December 2019

 

 

Fletcher King Plc

 

Consolidated Interim Statement of Comprehensive Income

 for the 6 months ended 31 October 2019

 

 

6 months ended

 

6 months ended

 

Year ended

 

31 October

 

31 October

 

30 April

 

2019

(Unaudited)

 

2018

(Unaudited)

 

2019 (Audited)

 

£000

 

£000

 

£000

 

 

 

 

 

 

Revenue

1,331

 

1,465

 

3,053

Employee benefits expense

(664)

 

(786)

 

(1,648)

Depreciation expense

(138)

 

(2)

 

(3)

Other operating expenses

(447)

 

(591)

 

(1,218)

Other operating income

36

 

45

 

91

 

 

 

 

 

 

Operating profit

118

 

131

 

275

 

 

 

 

 

 

Finance income

5

 

1

 

7

Finance expense

(15)

 

-

 

-

 

Profit before taxation

108

 

132

 

282

 

 

 

 

 

 

Taxation

 

(25)

 

 

(28)

 

 

(52)

 

 

 

 

 

 

 

Profit for the period

 

83

 

 

104

 

 

230

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Items that will not subsequently be reclassified to profit or loss:

Fair value gain on financial assets through other comprehensive income

95

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

178

 

104

 

230

 

 

 

 

 

 

 

Earnings per share (note 4)

 

 

 

 

 

- Basic

0.90p

 

1.13p

 

2.50p

- Diluted

0.90p

 

1.13p

 

2.50p

 

Dividends per share

 

 

 

 

 

Interim dividend proposed

1.00p

 

1.00p

 

-

Dividends paid

0.75p

 

0.75p

 

1.75p

 

Fletcher King Plc

 

Consolidated Interim Statement of Financial Position

as at 31 October 2019

 

 

 

31 October

 

31 October

 

30 April

 

 

2019

(Unaudited)

 

2018

(Unaudited)

 

2019

(Audited)

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

7

 

10

 

9

Right-of-use asset

 

680

 

-

 

-

Financial assets

 

1,698

 

1,603

 

1,603

Deferred tax assets

 

16

 

16

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,401

 

1,629

 

1,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Trade and other receivables

 

963

 

823

 

1,809

Cash and cash equivalents

 

2,149

 

2,277

 

2,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,112

 

3,100

 

3,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

5,513

 

4,729

 

5,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

477

 

482

 

1,204

Current taxation liabilities

 

49

 

71

 

24

Lease liabilities

 

314

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

840

 

553

 

1,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non current liabilities

 

 

 

 

 

 

Lease liabilities

 

392

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Share capital

 

921

 

921

 

921

Share premium

 

140

 

140

 

140

Investment revaluation reserve

 

95

 

-

 

-

Reserves

 

3,125

 

3,115

 

3,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

4,281

 

4,176

 

4,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

5,513

 

4,729

 

5,438

 

 

 

 

 

 

 

 

Fletcher King Plc

 

Consolidated Interim Statement of Changes in Equity

for the 6 months ended 31 October 2019

 

 

 

 

 

 

 

Investment

 

Profit

 

 

 

 

 

Share

 

Share

 

revaluation

 

and

 

 

TOTAL

 

 

capital

 

premium

 

reserve

 

loss

 

 

EQUITY

 

 

£000

 

£000

 

£000

 

£000

 

 

£000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 May 2019

 

921

 

140

 

-

 

3,149

 

 

4,210

Adjustment on initial application of IFRS 16 (net of tax)

 

-

 

-

 

 

-

 

(38)

 

 

(38)

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment balance as at 1 May 2019

 

921

 

140

 

-

 

3,111

 

 

4,172

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

 

-

 

-

 

83

 

 

83

Fair value gain on financial assets through other comprehensive income

 

            -

 

            -

 

 

95

 

-

 

 

95

Equity dividends paid

 

-

 

-

 

-

 

(69)

 

 

(69)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 October 2019 (Unaudited)

 

921

 

140

 

95

 

3,125

 

 

4,281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 May 2018

 

921

 

140

 

-

 

3,080

 

 

4,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

            -

 

            -

 

 

-

 

104

 

 

104

Equity dividends paid

 

 

            -

 

 

            -

 

 

-

 

(69)

 

 

 

(69)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 October 2018 (Unaudited)

 

921

 

 

140

 

 

-

 

 

3,115

 

 

 

4,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 May 2018

 

921

 

140

 

-

 

3,080

 

 

4,141

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

            -

 

            -

 

 

-

 

230

 

 

230

Equity dividends paid

 

 

            -

 

 

            -

 

 

-

 

(161)

 

 

 

(161)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 April 2019 (Audited)

 

921

 

140

 

-

 

3,149

 

 

4,210

 

 

 

 

 

 

 

 

 

 

 

 

 

Fletcher King Plc

 

Consolidated Interim Statement of Cash Flows

for the 6 months ended 31 October 2019

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

 

31 October

 

31 October

 

30 April

 

 

 

2019 (Unaudited)

 

2018 (Unaudited)

 

2019

(Audited)

 

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Profit before taxation from continuing operations

108

 

132

 

282

 

Adjustments for:

 

 

 

 

 

 

 

Depreciation expense

 

138

 

2

 

3

 

Finance income

 

(5)

 

(1)

 

(7)

 

Finance expense

 

15

 

-

 

-

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

before movement in working capital

 

256

 

133

 

278

 

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

794

 

94

 

(892)

 

(Decrease)/increase in trade and other payables

(680)

 

(495)

 

226

 

 

 

 

 

 

 

 

 

Cash generated/(absorbed) from operations

 

370

 

(268)

 

(388)

 

Taxation paid

 

-

 

-

 

(70)

 

 

 

 

 

 

 

 

 

Net cash flows generated from/(used in) operating activities

 

370

 

(268)

 

(458)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of financial assets

 

-

 

(15)

 

  (15)

 

Finance income

 

5

 

1

 

7

 

 

 

 

 

 

 

 

 

Net cash flows from investing activities

 

 

5

 

 

(14)

 

 

(8)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Principal element of lease payments

 

(143)

 

-

 

-

 

Finance expense

 

(15)

 

-

 

-

 

Dividends paid to shareholders

 

 

(69)

 

 

(69)

 

 

(161)

 

 

 

 

 

 

 

 

 

 

Net cash flows from financing activities

 

 

(227)

 

 

(69)

 

 

(161)

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

148

 

(351)

 

(627)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at start of period

 

2,001

 

2,628

 

2,628

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

2,149

 

2,277

 

2,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fletcher King Plc

 

Explanatory Notes

 

1.     General information

 

The Company is a public limited company incorporated and domiciled in England and Wales. The address of its registered office is 61 Conduit Street, London W1S 2GB.

 

These interim financial statements were approved by the Board of Directors on 19 December 2019.

 

2.     Basis of preparation

 

The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union.  IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting Standards Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to apply for the year ended 30 April 2020.

 

Except as described below, the accounting policies applied by the Group in this interim report are the same as those applied by the Group in the consolidated financial statements for the year ended 30 April 2019.

 

Changes in significant accounting policies

 

The Group has initially adopted IFRS 16 Leases from 1 May 2019. Under the transition methods chosen, comparative information is not restated. The effect of adopting the standards in respect of prior years is recognised as an adjustment to opening equity as at 1 May 2019.

 

The changes to the accounting policies for leases and the effect of initially applying the new standards are mainly attributed to the following:

-     Recognition of right use of assets and lease liabilities for former operating leases

-     Recognition of depreciation of the right use asset and an interest charge in place of operating lease charge in the income statement

 

The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 30 April 2020.

 

A number of other new and amended standards and interpretations are effective from 1 May 2019 but they do not have a material effect on the Group's financial statements.

 

3.     Non Statutory Accounts

 

The financial information for the period ended 31 October 2019 set out in this interim report does not constitute the Group's statutory accounts for that period. Whilst the financial figures included in this interim report have been computed in accordance with IFRS, this interim report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS34. The statutory accounts for the year ended 30 April 2019 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

 

The financial information for the 6 months ended 31 October 2019 and 31 October 2018 is unaudited.

 

 

Fletcher King Plc

 

Explanatory Notes

 

 

4.     Earnings per share

 

6 months to 31 October 2019

Number

6 months to 31 October 2018

Number

Year ended 30 April 2019

Number

 

Weighted average number of shares for basic earnings per share

 

9,209,779

 

9,209,779

 

9,209,779

Share options

-

-

-

Weighted average number of shares for diluted earnings per share

9,209,779

9,209,779

9,209,779

 

 

 

 

£000

 

 

 

£000

 

 

£000

 

Earnings for basic and diluted earnings per share:

 

 

83

 

104

 

230

 

 

Basic earnings per share

 

 

 

0.90p

 

 

1.13p

 

 

2.50p

Diluted earnings per share

 

0.90p

1.13p

2.50p

 


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