Source - LSE Regulatory
RNS Number : 0830J
Fletcher King PLC
18 December 2020
 

FLETCHER KING PLC

 

Interim Results for the 6 months ended 31 October 2020

 

 

Financial Highlights

 

                  Turnover:                    £869,000                          (2019: £1,331,000)

                 

                  Earnings before tax:  £447,000 loss                   (2019: £108,000 profit)

 

                  Basic EPS:                  (4.47p) per share             (2019: 0.90p per share)

 

                  Dividend proposed:    nil                                    (2019: 1.00p per share)

 

 

Operational Highlights

·    As announced on 2 November 2020, performance was significantly lower than the comparative period last year, reflecting the economic impact of the Covid-19 pandemic on the markets in which the Company operates.

·    Steady and predictable revenue from asset management and fund management clients provided support for the business. However, transaction-based fees from investment deals, bank valuations and rating appeals were materially lower than would otherwise be expected.

·    The Company remains in a good position to withstand the current economic crisis and is well supported by a strong balance sheet. Our high quality team continues to enjoy excellent relationships with our clients and this provides a sound platform for any return to more normal market conditions.

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

"The Covid-19 pandemic has had a significant adverse impact on the markets in which we operate and this is reflected in our financial performance for the period. The recent approval of a vaccine offers hope of a route back towards normality although our performance will be highly dependent on the pace and extent to which markets recover. Our strong balance sheet provides good support in these turbulent times".

 

 

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 / Liam Murray

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 £869,000 (2019: £1,331,000) with a loss before tax of £447,000 (2019: profit of £108,000).

 

Dividend

 

In view of financial performance for the first half, and the continued uncertainty from the impact of Covid-19 over the coming months, the Board is not declaring an interim dividend (2019: 1.0p per share). We remain focused on long term shareholder returns and will look to restart distributions as soon as it is prudently appropriate to do so.

 

The Commercial Property Market

 

Little has changed in the commercial property market since my Chairman's Statement in the accounts for the year to 30 April 20 (announced on 14 September 2020).

 

The commercial property market continues to be dominated by the uncertainties created by Covid-19 and to a lesser extent the Brexit negotiations.

 

These uncertainties have created an environment where many organisations have deferred decisions on either renting space or purchasing investment property. The volume of transactions across the board is substantially down on previous years.

 

The good news is the programme of vaccinating the population has commenced and will be rolled out over the coming months. We hope this will be the game changer we have all been waiting for and will start the journey back to the new normality.

 

Against the above scenario, the segment of the commercial property market which has continued its upward spiral is Industrial, which has been fuelled by the growth in on-line sales. However, this very growth has further accelerated the decline in traditional High Street retailing and it is unlikely to ever return to its former level. Offices have also suffered during this period and it has accelerated the change in how offices are occupied by probably at least five years. However offices have a very important part to play in most organisations and we expect this sector to recover.

 

Business Overview

 

As highlighted in the announcements of 20 August and 14 September 2020, and confirmed in the Trading Update of 2 November 2020, the huge uncertainty and commercial property market dislocation caused by the Covid-19 pandemic has had a material adverse impact on transaction-based fees such as investment deals, bank valuations and agreement of rating appeals. This is reflected in the financial performance for the first half of the financial year with revenue down on the same period last year.

 

Whilst revenue has been materially reduced in the period, it has been supported by our property management and fund management clients who are, in the main, focused on the office and industrial sectors with relatively low exposure to the hard-hit retail, leisure and hospitality sectors. The property management team has been successful during the period in collecting 80% of rents within 7 days of the due date, a good result in difficult circumstances.

 

Investment business suffered significantly during the period, with Covid-19 related restrictions on viewings, and buyers and sellers adopting a wait-and-see approach.

 

The volume of valuation instructions from banks was also significantly reduced and reflected the quiet investment markets. There was slower than normal progression of Ratings appeals at the Valuation Office with a consequential reduction in fee income.

 

Whilst it is disappointing to report a loss for the period, our primary concern during the pandemic has been the well-being of our staff and all employees have been able to work from home from the outset, continuing to deliver the high quality service that our clients expect. With a significant part of our business focussed on Property and Asset Management, we have also been particularly concerned with the wellbeing of occupiers of the portfolios under our management, helping landlords and tenants to overcome specific issues and enabling a return to work.

 

The Company has reduced discretionary expenditure where possible. However, the Company has been impacted by a severe contraction in the Professional Indemnity insurance market, particularly with regard to property valuation work. As previously announced, the renewal premium has more than doubled, increasing by just over £200,000 for the financial year.

 

 

Outlook

 

The economic environment remains highly uncertain and it is unclear how significantly the longer term economic impact of Covid-19 will weigh on corporate and investor sentiment. The recent positive news on vaccine development offers hope that the commercial property market may start to improve in 2021, but the pace and extent at which this materialises is very difficult to predict. It is likely that the remainder of the financial year will continue to be affected by the Covid-19 pandemic with transaction-based fees materially lower than would otherwise be expected. We therefore expect to report a loss for the full financial year.

 

When the economic environment improves, the Company has an encouraging pipeline of potential investment business to transact. The sheer number of rating appeals outstanding also gives hope that at least a few of them will provide material returns, although timing of agreement with the Valuation Office is very difficult to predict.

 

We expect Fund and Property Management mandates to continue to provide stable and recurring fee income. Valuation work is also likely to pick up in the second half with annual assets valuations for clients traditionally falling in this period.

 

The Company remains in a good position to withstand the current economic crisis and is well supported by a strong balance sheet.

 

 

DAVID FLETCHER

CHAIRMAN

18 December 2020

 

Fletcher King Plc

 

Consolidated Interim Statement of Comprehensive Income

 for the 6 months ended 31 October 2020

 

 

6 months ended

 

6 months ended

 

Year ended

 

31 October

 

31 October

 

30 April

 

2020

(Unaudited)

 

2019

(Unaudited)

 

2020 (Audited)

 

£000

 

£000

 

£000

 

 

 

 

 

 

Revenue

869

 

1,331

 

2,616

Employee benefits expense

(637)

 

(664)

 

(1,441)

Depreciation expense

(140)

 

(138)

 

(278)

Other operating expenses

(544)

 

(447)

 

(910)

Share based payment expense

-

 

-

 

(68)

Other operating income

12

 

36

 

57

 

 

 

 

 

 

Operating (loss)/profit

(440)

 

118

 

(24)

 

 

 

 

 

 

Investment income

-

 

-

 

113

Finance income

2

 

5

 

14

Finance expense

(9)

 

(15)

 

(27)

 

(Loss)/profit before taxation

(447)

 

108

 

76

 

 

 

 

 

 

Taxation

 

35

 

 

(25)

 

 

(40)

 

 

 

 

 

 

 

(Loss)/profit for the period

 

(412)

 

 

83

 

 

36

 

 

 

 

 

 

 

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

 

99

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

(412)

 

178

 

135

 

 

 

 

 

 

 

Earnings per share (note 4)

 

 

 

 

 

- Basic

(4.47p)

 

0.90p

 

0.39p

- Diluted

(4.47p)

 

0.90p

 

0.39p

 

Dividends per share

 

 

 

 

 

Interim dividend proposed

-

 

1.00p

 

-

Dividends paid

0.50p

 

0.75p

 

1.75p

 

Fletcher King Plc

 

Consolidated Interim Statement of Financial Position

as at 31 October 2020

 

 

 

31 October

 

31 October

 

30 April

 

 

2020

(Unaudited)

 

2019

(Unaudited)

 

2020

(Audited)

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

16

 

7

 

21

Right-of-use asset

 

408

 

680

 

544

Financial assets

 

630

 

1,698

 

630

Deferred tax assets

 

-

 

16

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,054

 

2,401

 

1,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Trade and other receivables

 

501

 

963

 

680

Cash and cash equivalents

 

3,113

 

2,149

 

3,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,614

 

3,112

 

4,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

4,668

 

5,513

 

5,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

499

 

477

 

689

Current taxation liabilities

 

-

 

49

 

35

Lease liabilities

 

299

 

314

 

299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

798

 

840

 

1,023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non current liabilities

 

 

 

 

 

 

Lease liabilities

 

114

 

392

 

262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Share capital

 

921

 

921

 

921

Share premium

 

140

 

140

 

140

Investment revaluation reserve

 

-

 

95

 

-

Reserves

 

2,695

 

3,125

 

3,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

3,756

 

4,281

 

4,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

4,668

 

5,513

 

5,499

 

 

 

 

 

 

 

 

Fletcher King Plc

 

Consolidated Interim Statement of Changes in Equity

for the 6 months ended 31 October 2020

 

 

 

 

 

 

 

Investment

 

Profit

 

 

 

 

 

Share

 

Share

 

revaluation

 

and

 

 

TOTAL

 

 

capital

 

premium

 

reserve

 

loss

 

 

EQUITY

 

 

£000

 

£000

 

£000

 

£000

 

 

£000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 May 2020

 

921

 

140

 

-

 

3,153

 

 

4,214

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

 

-

 

-

 

(412)

 

 

(412)

Equity dividends paid

 

-

 

-

 

-

 

(46)

 

 

(46)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 October 2020 (Unaudited)

 

921

 

140

 

-

 

2,695

 

 

3,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 May 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

 

 

 

 

 

 

 

 

 

 

 

 

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 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 period

 

            -

 

            -

 

 

-

 

135

 

 

135

Equity dividends paid

 

-

 

-

 

-

 

(161)

 

 

(161)

Share based payment expense

 

-

 

-

 

-

 

68

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 April 2020 (Audited)

 

921

 

140

 

-

 

3,153

 

 

4,214

 

 

 

 

 

 

 

 

 

 

 

 

 

Fletcher King Plc

 

Consolidated Interim Statement of Cash Flows

for the 6 months ended 31 October 2020

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

 

31 October

 

31 October

 

30 April

 

 

 

2020 (Unaudited)

 

2019 (Unaudited)

 

2020

(Audited)

 

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

(Loss)/Profit before taxation from continuing operations

(447)

 

108

 

76

 

Adjustments for:

 

 

 

 

 

 

 

Depreciation expense

 

140

 

138

 

278

 

Investment income

 

-

 

-

 

(113)

 

Finance income

 

(2)

 

(5)

 

(14)

 

Finance expense

 

9

 

15

 

27

 

Share based payment expense

 

-

 

-

 

68

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

before movement in working capital

 

(300)

 

256

 

322

 

 

 

 

 

 

 

 

Decrease in trade and other receivables

179

 

794

 

1,077

 

Decrease in trade and other payables

(190)

 

(680)

 

(468)

 

 

 

 

 

 

 

 

 

Cash (absorbed by)/generated from operations

 

(311)

 

(370)

 

931

 

Taxation paid

 

-

 

-

 

(14)

 

 

 

 

 

 

 

 

 

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

 

(311)

 

(370)

 

917

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Sale of financial assets

 

-

 

-

 

1,072

 

Purchase of fixed assets

 

-

 

-

 

(18)

 

Investment income

 

-

 

-

 

113

 

Finance income

 

2

 

5

 

14

 

 

 

 

 

 

 

 

 

Net cash flows from investing activities

 

 

2

 

 

5

 

 

1,181

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Lease payments

 

(156)

 

(158)

 

(314)

 

Dividends paid to shareholders

 

 

(46)

 

 

(69)

 

 

(161)

 

 

 

 

 

 

 

 

 

 

Net cash flows from financing activities

 

 

(202)

 

 

(227)

 

 

(475)

 

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(511)

 

(148)

 

1,623

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at start of period

 

3,624

 

2,001

 

2,001

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

3,113

 

2,149

 

3,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 17 December 2020.

 

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 2021.

 

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 2020. There are no new standards, interpretations and amendments, effective for the first time from 1 May 2020, that have had a material effect on the financial statements of the Group.

 

 

3.     Non Statutory Accounts

 

The financial information for the period ended 31 October 2020 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 2020 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 2020 and 31 October 2019 is unaudited.

 

 

Fletcher King Plc

 

Explanatory Notes

 

 

4.     Earnings per share

 

6 months to 31 October 2020

Number

6 months to 31 October 2019

Number

Year ended 30 April 2020

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:

 

 

(412)

 

83

 

36

 

 

Basic earnings per share

 

 

 

(4.47p)

 

 

0.90p

 

 

0.39p

Diluted earnings per share

 

(4.47p)

0.90p

0.39p

 

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