TIDMFLK
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: GBP869,000 (2019: GBP1,331,000)
Earnings before tax: GBP447,000 loss (2019: GBP108,000 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 GBP869,000 (2019: GBP1,331,000) with
a loss before tax of GBP447,000 (2019: profit of GBP108,000).
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 GBP200,000 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 6 months
ended ended Year ended
31 October 31 October 30 April
2020 2019
(Unaudited) (Unaudited) 2020 (Audited)
GBP000 GBP000 GBP000
------------------------------------- ------------- --- ------------- --- ---------------
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 2019 2020
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- -----------
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
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ------------- ------------- ------------ ------- -------
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 6 months
ended ended Year ended
31 October 31 October 30 April
2020
2020 (Unaudited) 2019 (Unaudited) (Audited)
GBP000 GBP000 GBP000
------------------------------------ ----------------- ----------------- -----------
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 6 months Year ended
to 31 October to 31 October 30 April
2020 2019 2020
Number Number 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
=============== =============== ============
GBP000 GBP000 GBP000
--------------- --------------- ------------
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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END
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