REG - Fletcher King PLC - Half-year Report

Fletcher KingAnnouncement

18/12/2020 07:01

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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