Information  X 
Enter a valid email address

Fletcher King PLC (FLK)

  Print      Mail a friend       Annual reports

Monday 14 September, 2020

Fletcher King PLC

Final Results

RNS Number : 8189Y
Fletcher King PLC
14 September 2020
 

FLETCHER KING PLC

Audited results for the Year Ending 30th April 2020

 

Highlights

 

· Revenue for the year of £2,616,000 (2019: £3,053,000)

· Statutory profit before tax of £76,000 (2019: £282,000)

· Adjusted profit before tax of £243,000 (2019: £282,000) *

· Cash generated from operations of £917,000 (2019: £458,000 absorbed by operations)

· Adjusted basic earnings per share of 2.20p (2019: 2.50p) *

· Final dividend of 0.50p per share proposed. An interim dividend of 1.00p per share was paid and therefore the total ordinary dividend for the year will be 1.50p per share (2019: 1.75p)

· Sale of interest in SHIPS 15 Syndicate realising profit of £99,000

· Significant cash reserves: £3.6m as at 30 April 2020

· Well positioned to withstand current crisis

 

*Adjusted results are before share based payment expenses and after other comprehensive income (see note 2). All share options were surrendered in the year. However, the Company is required under IFRS 2 to recognise a share based payment charge of £68,000 (2019: £nil). The Company realised a profit of £99,000 on disposal of the SHIPS 15 syndicate investment. However, the Company is required under IFRS 9 to include this as a fair value gain in "other comprehensive income".

 

Commenting on the results, David Fletcher, chairman of Fletcher King Plc said:

 

"In a financial year dominated by Brexit and political uncertainties, it is pleasing to report performance that is only slightly reduced from last financial year, and also to propose a final dividend to shareholders.

 

We have now moved into even more uncertain times and it is impossible to accurately assess our future trading performance in current market conditions. However, our strong balance sheet and significant cash reserves provide good support to help us withstand the current economic crisis".

 

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

 

END

 

For further information, please call:

David Fletcher/Peter Bailey, Fletcher King      020 7493 8400

James Caithie/Liam Murray, Cairn Financial Advisers LLP 020 7213 0880

 

 

CHAIRMAN'S STATEMENT

 

Results

 

Revenue for this year was £2,616,000 (2019: £3,053,000). Adjusted profit before tax (see note 2) was £243,000 (2019: £282,000). Statutory profit before tax was £76,000 (2019: £282,000)

 

The Board considers the adjusted results to be an important measure of performance and to be more representative of performance for the year than the statutory results (which have been prepared in accordance with International Financial Reporting Standards). Adjusted results include the profit on disposal of the SHIPS 15 syndicate interest for £99,000 and exclude a share based payment expense of £68,000 (2019: £nil) that is required to be recognised in the accounts even though all outstanding EMI options were surrendered in the year.

 

Dividend

 

The Board is proposing a final dividend of 0.5p per share. The final dividend is subject to shareholder approval at the AGM and will be paid on 30 October 2020 to shareholders on the register at the close of business on 2 October 2020. With the interim dividend of 1.00p per share (2019: 1.00p per share) the dividend for this year will amount to 1.50p per share (2019: 1.75p per share).

 

The Commercial Property Market

 

The year to 30 April 2020 was a difficult one in the industry with both Brexit and political uncertainties adversely affecting the market.

 

Generally tenants in all sectors were deferring decisions and whilst there was reasonable demand for offices and industrials, the retail sector continued its decline. There were plenty of funds available for investment but buyers remained cautious.

 

After the General Election and the return of a Conservative Government with the largest majority for decades, the market began to move forward and there was enthusiasm from both investors and tenants to make decisions and plan for the future. For a few busy weeks the skies looked blue, and then there was the emergence of Covid-19 and lockdown.

 

Since then the commercial property market has been in a state of flux. Retail continues to suffer with no end in sight yet to its downward spiral. There is little leasing activity and with an ever-increasing number of retailers facing the prospect of bankruptcy, both rental and capital values are continuing to fall. However, since lock-down, on-line retailing has grown strongly and now represents over 30% of all purchases but this, of course, is further hastening the potential demise of the High street.

Within the commercial property market, conversely the industrial property market is very buoyant, driven in large part by demand from online sales and a lack of good quality property stock. Both rental and capital values are continuing to grow and there is strong demand from institutional investors, property companies and high net worth individuals.

The office lettings and capital markets remain slow. Even before Covid many tenants were assessing their future work practices by implementing more hot desking and reducing their space requirements. We believe that lockdown has accelerated that process by as much as five years.

Office workers need to get back to work in the big city centres for the survival of the infrastructure of shops, restaurants, coffee shops, dry cleaners etc. However there remains a fear factor for commuters using public transport and the safety issue may well not go away until there is a vaccine. We believe the office market will return strongly but the timing is impossible to predict.

 

Business Overview

 

With challenging market conditions, it proved to be a difficult trading period with revenue lower than the previous financial year. This was compensated by increased income from SHIPS investments and overall adjusted profit for the Group was only slightly lower than last year.

 

The Investment team transacted a similar number of deals to last year but the average deal size, and consequential fee, was significantly lower.

 

The volume of bank valuations was also down and the Valuation Office continues to delay settling rating appeals.

 

The Property Management team strengthened their portfolio of client instructions with additional Fund Management mandates and this provides valuable recurring revenue for the Company.

 

The SHIPS investment in Sekforde Street was sold during the year realising a profit for investors in the fund. We continue to hold an investment in the SHIPS property in Botolph Lane where there remain two vacant floors.

 

All employees have been working from home since 17 March 2020 and the health and wellbeing of employees is of paramount importance. The Company has invested in systems and processes to support remote working and all teams have been functioning well in the new environment.

 

 

 

 

Outlook

 

Whilst there is huge uncertainty caused by the Covid-19 virus, it seems increasingly likely that the wider economic impact will be severe and prolonged. The UK government has taken unprecedented measures to support businesses during the initial lockdown phase, but as support measures are wound down and businesses are forced to make tough decisions, the longer-term economic impact will be brought more sharply into focus.

 

It is very difficult to accurately assess our future trading performance in the current market conditions. It will be extremely challenging to remain profitable and it is very likely that the Company will make a loss in the first half of its financial year.

 

Since the year end, we have renewed our Professional Indemnity cover and been faced with a severe contraction in the market for such insurance, particularly with regard to our property valuation work. The premium has increased by just over £200,000 for the financial year.

 

We expect Fund and Property management mandates to continue to provide stable and recurring fee income. We are fortunate that the majority of the portfolios that we manage are focussed on industrial and office sectors with much lower exposure to retail, leisure and hospitality.

 

Transaction based fees such as investment deals and bank valuations rely on activity in the market and fees have been materially lower than normal since the commencement of lockdown. The investment team has an encouraging pipeline of instructions and potential deals but there is huge uncertainty around the timing or likelihood of completions. It remains to be seen how strongly activity returns to the market but it is likely that transaction based fees for the year will be materially lower than would otherwise be expected.

 

The Company is in a good position to withstand the current crisis and continues to have a strong balance sheet, with cash reserves of £3.6m as at 30 April 2020. The Company has not drawn on any of the support measures offered by the government in response to Covid-19.

 

Working closely with our loyal clients and experienced colleagues we have an established and stable partnership to take us through these difficult and challenging times.

 

DAVID FLETCHER

CHAIRMAN

14 September 2020

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 April 2020

 

 

Note

2020

2019

 

 

£000

£000

 

 

 

 

 

 

 

 

Revenue

 

2,616

3,053

 

 

 

 

Employee benefits expense

 

(1,441)

(1,648)

Depreciation expense

5

(278)

(3)

Other operating expenses

Share based payment expense

 

(910)

(68)

(1,218)

-

 

 

(2,697)

(2,869)

 

 

 

 

Other operating income

 

57

91

Investment income

 

113

-

Finance income

 

14

7

Finance expense

5

(27)

-

 

 

 

 

Profit before taxation

 

76

282

 

 

 

 

 

 

 

 

Taxation

 

(40)

(52)

 

 

 

 

Profit for the year

 

36

230

 

 

 

 

Other comprehensive income

 

 

 

Fair value gain on financial assets through

 

99

-

Other comprehensive income

 

 

 

 

 

 

 

Total comprehensive income for the year attributable to equity shareholders

 

 

 

 

135

 

230

Earnings per share

 

 

 

Basic

Diluted

 

4

4

 

0.39p

0.39p

 

2.50p

2.50p

 

Adjusted earnings per share

 

 

 

 

 

 

 

Basic

4

2.20p

2.50p

Diluted

 

4

2.20p

2.50p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 April 2020

 

 

 

 

2020

2019

 

£000

£000

 

 

 

Assets

 

 

Non-current assets

 

 

Property, plant and equipment

21

9

Right-of-use asset (see note 5)

544

-

Financial assets

630

1,603

Deferred tax assets

-

16

 

1,195

1,628

 

 

 

Current assets

 

 

Trade and other receivables

680

1,809

Cash and cash equivalents

3,624

2001

 

4,303

3,810

 

 

 

 

 

 

 

 

 

Total assets

5,499

5,438

 

 

 

Liabilities

 

 

Current liabilities

 

 

Trade and other payables

689

1,204

Current taxation liabilities

35

24

Lease liabilities (see note 5)

299

-

 

1,023

1,228

 

 

 

Non current liabilities

 

 

Lease liabilities (see note 5)

262

-

 

 

 

 

 

 

Total liabilities

1,285

1,228

 

 

 

Shareholders' equity

 

 

Share capital

921

921

Share premium

140

140

Investment revaluation reserve

-

-

Retained Earnings

3,153

3,149

Total shareholders' equity

4,214

4,210

 

 

 

Total equity and liabilities

5,499

5,438

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 30 April 2020

 

 

2020

2019

 

£000

£000

 

 

 

Cash flows from operating activities

 

 

Profit before taxation from continuing operations

76

282

Adjustments for:

 

 

Depreciation expense

278

3

Investment income

(113)

-

Finance income

(14)

(7)

Finance expense

27

-

Share based payment expense

68

-

 

 

 

Cash flows from operating activities before

movement in working capital

 

 

322

278

(Increase)/decrease in trade and other receivables

1,077

(892)

Increase/(decrease) in trade and other payables

(468)

226

 

 

 

Cash (absorbed)/generated from operations

931

(388)

 

 

 

Taxation paid

(14)

(70)

 

 

 

Net cash flows from operating activities

917

(458)

 

 

 

Cash flows from investing activities

 

 

Purchase of investments

-

(15)

Sale of investments

1,072

-

Purchase of fixed assets

(18)

-

Investment income

113

-

Finance income

14

7

Net cash flows from investing activities

1,181

(8)

 

 

 

Cash flows from financing activities

 

 

Lease payments

(314)

-

Dividends paid to shareholders

(161)

(161)

Net cash flows from financing activities

(475)

(161)

 

 

 

Net decrease in cash and cash equivalents

1,623

(627)

Cash and cash equivalents at start of year

2,001

2,628

Cash and cash equivalents at end of year

3,624

2,001

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 April 2020

 

 

 

Note

 

Share

capital

 

Share

premium

 

Retained

Earnings

 

TOTAL

EQUITY

 

 

£000

£000

£000

£000

 

 

 

 

 

 

Balance at 1 May 2018

 

921

140

3,080

4,141

 

 

 

 

 

 

Total comprehensive income for the year

 

-

-

230

230

Equity dividends paid

2

-

-

(161)

(161)

 

 

 

 

 

 

Balance at 30 April 2019

 

921

140

3,149

4,210

 

 

 

 

 

 

Adjustment on initial application of

 

 

 

 

 

IFRS 16 (net of tax)

 

-

-

(38)

(38)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted balance as at 1 May 2019

 

921

140

3,111

4,172

 

 

 

 

 

 

Total comprehensive income for the year

 

-

-

135

135

Equity dividends paid

2

-

-

(161)

(161)

Share based payment expense

 

-

-

68

68

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 April 2020

 

921

140

3,153

4,214

 

 

 

 

 

 

 

 

 NOTES

 

 

1. General information

 

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.

 

The financial information is presented in pounds sterling, prepared on a historical cost basis, except for the revaluation of contingent considerations and rounded to the nearest thousand. The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 30 April 2020 or 30 April  2019.

 

The financial information for the year ended 30 April 2019 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and 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 statutory accounts for the year ended 30 April 2020 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them.

 

 

2. Alternative performance measures - profit reconciliation

 

The reconciliation set out below provides additional information to enable the reader to reconcile to the numbers discussed in the Chairman's Statement and Highlights section.

 

Year ended 30 April

2020

2019

 

£000

£000

 

 

 

Profit before taxation

76

282

Add back: Share based payment expense

Include: Fair value gain on financial assets through OCI

68

99

-

-

 

 

 

Adjusted profit before share based payment expense and taxation

243

282

 

 

 

Taxation

(40)

(52)

 

 

 

Adjusted profit after tax for the year

203

230

 

 

The fair value gain on financial assets represents the realised gain in the year on the disposal of the Group's interest in the SHIPS 15 syndicate. The profit is shown in the Consolidated Statement of Comprehensive Income as other comprehensive income. The Company has accounted for the surrender of options in the year as a cancellation, in accordance with IFRS 2, resulting in an acceleration of vesting and a share based payment charge of £68,000 (2019: £nil).  The charge reflects the amount that otherwise would have been recognised for services received over the remainder of the vesting period (all outstanding options were surrendered in the year).

 

 

 

3.  Dividends

 

Year ended 30 April

2020

2019

 

£000

£000

Equity dividends on ordinary shares:

 

 

Declared and paid during year

 

 

Ordinary final dividend for the year ended 30 April 2019: 0.75p per share (2018:  0.75p)

69

 

69

 

Interim dividend for the year ended 30 April 2020: 1.00p per share (2019: 1.00p)

92

92

 

 

 

 

161

161

 

 

 

Proposed ordinary final dividend for the year ended

30 April 2020: 0.50p per share

 

46

 

 

 

 

4. Earnings per share

 

Number of shares

2020

No

2019

No

 

 

 

Weighted average number of shares for basic earnings per share

Share options

9,209,779

-

9,209,779

-

 

Weighted average number of shares for diluted earnings per share

 

9,209,779

 

 

9,209,779

 

 

 

 

 

 

Earnings

 

 

£'000

 

 

£000

 

Profit after tax for the year

 

36

 

230

(used to calculate the basic and diluted earnings per share)

 

 

Add back: Share based payment expense

68

-

Include: Fair value gain on financial assets through OCI

99

-

 

 

 

Adjusted profit after tax for the year

203

230

(used to calculate the adjusted basic and diluted earnings per share)

 

 

 

 

Earnings per share

 

 

 

Basic

Diluted

0.39p

0.39p

2.50p

2.50p

 

 

Adjusted earnings per share

 

Basic

Diluted

 

 

 

 

 

 

2.20p

2.20p

 

 

 

 

2.50p

2.50p

Share options were granted in March 2019 and October 2016. All share options were surrendered in April 2020. The share options were non-dilutive for the years ending 30 April 2019 and 2020 and as a result were not included within the weighted average number of shares for the diluted earnings per share calculations.

 

5. Adoption of IFRS 16

 

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as "operating leases" under the principles of IAS 17 Leases. The liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as at 1 May 2019.

 

The Group has adopted IFRS 16 using the modified retrospective method (including appropriate practical expedients), with the effect of initially applying this standard at the date of initial application. Accordingly, the comparative information presented for the prior year has not been restated and it is presented, as previously reported, under IAS 17 and related interpretations.

 

The Group has reviewed the lease terms of its leases in force at the date of transition and has identified one relevant lease, being the lease of the Group's office at Conduit Street, London. The lease terminates on 3 May 2022.

 

The Group has concluded that the interest rate implicit in the lease cannot be readily determined and therefore the lease has been discounted by the incremental borrowing rate (IBR) of 4.0%, being the rate of interest that the group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain assets of a similar value to the right-of-use asset in a similar economic environment.

 

Transition to IFRS 16 requires the right-of-use asset to be recognised at the carrying amount as if IFRS 16 had been applied since the lease commencement date, as discounted by the incremental borrowing rate at the date of initial application. This has led to a decrease in retained earnings as at 1 May 2019, net of tax, of £38,000.

 

The table below reconciles the measurement of lease liabilities upon transition with reference to operating lease commitments at 30 April 2019.

 

 

 

£000

 

 

Operating lease commitments at 30 April 2019 per IAS 17

Discounted using incremental borrowing rate at 1 May 2019

895

(47)

 

 

Lease liability recognised at 1 May 2019 per IFRS 16

848

 

 

The balance sheet shows the following amounts relating to lease liabilities:

 

£000

 

 

As at 1 May 2019

Change in accounting policy (adoption of IFRS 16)

-

848

As at 1 May 2019 (restated)

848

Repayment of lease liabilities

(314)

Unwinding of discount

27

Closing amount as at 30 April 2020

561

 

 

Current lease liabilities

299

Non-current lease liabilities

262

 

561

 

Under IFRS 16, the Company has recognised a combined depreciation charge and interest expense in the year of £299,000. Under IAS 17, the charge in respect of lease costs would have been £302,000. There has been no impact on cash flows.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
FR UOUWRRAUKARR

a d v e r t i s e m e n t