Source - LSE Regulatory
RNS Number : 6463N
Fletcher King PLC
01 October 2021
 

 

FLETCHER KING PLC

Audited results for the Year Ending 30 April 2021

 

Highlights

 

·      Revenue for the year of £2,264,000 (2020 restated: £2,896,000) **

·      Statutory loss before tax of £834,000 (2020: profit of £76,000)

·      Adjusted loss before tax of £935,000 (2020: profit of £243,000) *

·      Adjusted basic loss per share of 8.57p (2020: earnings of 2.20p) *

·      Final dividend: £nil (2020: 0.5p)

·      Significant cash reserves: £2.9m as at 30 April 2021 (2020: £3.6m)

 

*Adjusted results are before share based payment expenses and after other comprehensive income (see note 2).

 

** Prior year restatement relates to the realignment of the Group's revenue recognition policy to the principal versus agent requirements of IFRS 15. As a result, revenue has been presented gross of fees shared with third parties, with the related costs now included within other operating expenses. The impact on revenue and costs is £0.28m. The restatement has no impact on the Group's profit for the year, earnings per share or net asset position.

 

The Annual Report and Accounts will shortly be posted to the Company's website and a further announcement will be made when the document is sent to shareholders.

 

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

 

"It has been a challenging year and only the second in the history of the Company that we have reported a loss. We are reasonably optimistic for the coming year but it remains difficult to predict the outcome with any certainty. We anticipate returning to profit, although it may not be in the first half. Our balance sheet remains strong with good cash reserves".

 

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

 

 

For further information, please contact:



Fletcher King plc

Tel: +44 (0) 20 7493 8400

David Fletcher, Chairman

Peter Bailey, Finance Director




Cairn Financial Advisers LLP

Tel: +44 (0) 20 7213 0880

(Nominated Adviser)


James Caithie

Liam Murray




Buchanan


Henry Harrison-Topham

Jamie Hooper

Tilly Abraham

Tel: +44 (0) 20 7466 5000

fletcherking@buchanan.uk.com

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Results

 

Revenue for the year was £2,264,000 (2020 restated: £2,896,000). Adjusted loss before tax (see note 2) was £935,000 (2020: profit of £243,000). Statutory loss before tax was £834,000 (2020: profit of £76,000).

 

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 an unrealised loss of £101,000 on revaluation of the interest in the SHIPS 16 syndicate (2020: realised gain of £99,000).

 

Dividend

 

In view of the loss in the year, the Directors have resolved not to pay a final dividend (2020: 0.5p per share).

 

The Commercial Property Market

 

The year to 30 April 2021 will go down as one of the most difficult in the history of the commercial property industry. The continuing and ever-changing Covid-19 regulations and lockdowns have created an extreme level of uncertainty resulting in both occupiers and investors delaying their decision making.


However, the Industrial and Warehousing sector of the market bucked the trend and continued to be very active, fuelled by the growth of online shopping. This has resulted in strong rental growth and investors paying record prices.


Office workers continued to work from home and shoppers stayed away from both the high streets and the large shopping centres. There has been enormous downward pressure on retail rents and capital values have continued their long decline. Office rents have also suffered but to a lesser extent, although central London offices have remained resilient but on a much reduced take up. Yields have generally held firm, particularly for the large trophy assets, but there has been some slippage for smaller subprime buildings.

The vaccine rollout has been exceptional and appears to be controlling the impact of the disease. It is also giving confidence to many, who have had both doses, to return to public transport although utilisation levels remain well below pre Covid-19 figures.  City centres will not recover until all are happy to use public transport again.

 

Business Overview 

 

The huge uncertainty caused by the Covid-19 pandemic, resulting in a very significant fall in business activity, has had a material impact on the commercial property market and thus our trading results. For only the second time in the history of the Company are we reporting a loss.


The biggest impact was experienced in our transaction-based activities such as investment sales and acquisitions as well as bank valuations and the agreement of rating appeals.

Property and Fund management fees continued to flow and our rent collection statistics remained excellent. Fortunately, most of our clients have a relatively low exposure to the hard hit retail, leisure and hospitality sectors.


The volume of bank valuations continued to be significantly reduced and is likely to remain so until investors return in more force to the market. The Valuation Office continues to be extremely slow in agreeing rating appeals which is frustrating the potential for us to earn some substantial fees.

 

On 2 July 2021 the Company announced, in response to press speculation, that it was in discussions with Elliott Bernerd in respect of a potential purchase of existing shares, issue of new shares (together, constituting no more than 29.99% of the Company's issued share capital) and new board appointments (the "Potential Transaction").  Discussions remain ongoing, including regarding price, and while there can be no certainty that the Potential Transaction will proceed, the Board will make further announcements in due course.

 

Outlook

 

Whilst it is almost impossible to assess our future trading performance, we do however look forward to the coming year with some cautious optimism. Whilst Covid-19 will still be part of our lives, the vaccination programme has had a very positive effect in reducing the impact of the virus to a manageable level. Life is moving towards some degree of normality and hopefully this will continue. We hope to return to profitability in the coming year although there is no certainty that this will be achieved in the first half.


There are positive signs in the capital markets that both domestic and foreign investors are showing more interest and there appears to be a wall of money waiting for the right moment to buy.


We start the year with some reasonable sales instructions, some encouragingly from new clients, and we hope to add to the client base going forward. Our Fund and Property Management mandates will provide steady recurring income and we are working hard to expand that part of our business.


Bank Valuations are showing some signs of improvement but it is still early days. Unfortunately, on the Rating front there is no sign from the Valuation Office of them expediting the outstanding appeals we have in the pipeline.

Despite our reported loss we continue to be securely financed with a strong balance sheet and cash reserves of £2.9m as at 30 April 2021.


Strong client relationships, some of which have been in place for over fifty years, have grown even stronger in the last year as we have tackled together the challenges presented by this unprecedented period of turmoil.


We would like to thank both our clients and hard working staff for their loyalty to us.

 

 

DAVID FLETCHER

CHAIRMAN

30 September 2021

 

 



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 April 2021

 


Note

2021

2020



£000

£000




(Restated)*





Revenue


2,264

2,896





Employee benefits expense


(1,262)

(1,441)

Depreciation expense


(281)

(278)

Other operating expenses

Share based payment expense


(1,566)

-

(1,190)

(68)



(3,109)

(2,977)





Other operating income


25

57

Investment income


-

113

Finance income


2

14

Finance expense


(16)

(27)





(Loss)/profit before taxation


(834)

76









Taxation


146

(40)





(Loss)/profit for the year


(688)

36





Other comprehensive income




Fair value (loss)/gain on financial assets through


(101)

99

Other comprehensive income








Total comprehensive income for the year attributable to equity shareholders

 

 


 

(789)

 

135

Earnings per share




Basic

Diluted

 

4

4

 

(7.47p)

(7.47p)

 

0.39p

0.39p

 

Adjusted earnings per share








Basic

4

(8.57p)

2.20p

Diluted

 

4

(8.57p)

2.20p

























* Prior year restatement relates to the realignment of the Group's revenue recognition policy to the principal versus agent requirements of IFRS 15. As a result, revenue has been presented gross of fees shared with third parties, with the related costs now included within other operating expenses. The impact on revenue and costs is £0.28m. The restatement has no impact on the Group's profit for the year, earnings per share or net asset position.

 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 April 2021

 

 

 


2021

2020


£000

£000




Assets



Non-current assets



Property, plant and equipment

12

21

Right-of-use asset

272

544

Financial assets

529

630


813

1,195




Current assets



Trade and other receivables

1,148

680

Corporation tax debtor

111

-

Cash and cash equivalents

2,892

3,624


4,151

4,304










Total assets

4,964

5,499




Liabilities



Current liabilities



Trade and other payables

908

689

Provisions

100

-

Current taxation liabilities

-

35

Lease liabilities

577

299


1,585

1,023




Non current liabilities



Lease liabilities

-

262







Total liabilities

1,585

1,285




Shareholders' equity



Share capital

921

921

Share premium

140

140

Investment revaluation reserve

(101)

-

Retained Earnings

2,419

3,153

Total shareholders' equity

3,379

4,214




Total equity and liabilities

4,964

5,499




 

 

 

 

 



CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 30 April 2021

 

 

 


2020

2020


£000

£000




Cash flows from operating activities



(Loss)/profit before taxation from continuing operations

(834)

76

Adjustments for:



Movement in provision

100

-

Depreciation expense

281

278

Investment income

-

(113)

Finance income

(2)

(14)

Finance expense

16

27

Share based payment expense

-

68




Cash flows from operating activities before

movement in working capital



(439)

322




(Increase)/decrease in trade and other receivables

(468)

1,077

Increase/(decrease) in trade and other payables

219

(468)




Cash (absorbed)/generated from operations

(688)

931




Taxation paid

-

(14)




Net cash flows from operating activities

(688)

917




Cash flows from investing activities



Sale of investments

-

1,072

Purchase of fixed assets

-

(18)

Investment income

-

113

Finance income

2

14

Net cash flows from investing activities

2

1,181




Cash flows from financing activities



Lease payments

-

(314)

Dividends paid to shareholders

(46)

(161)

Net cash flows from financing activities

(46)

(475)




Net decrease in cash and cash equivalents

(732)

1,623

Cash and cash equivalents at start of year

3,624

2,001

Cash and cash equivalents at end of year

2,892

3,624

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 April 2021

 

 


 

Note

 

Share

capital

 

Share

premium

Investment

Revaluation

Reserve

 

Retained

Earnings

 

TOTAL

EQUITY



£000

£000

£000

£000

£000








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








Loss for the year


-

-

-

(688)

(688)

Fair value loss on financial assets

through other comprehensive income


 

-

 

-

 

(101)

 

-

 

(101)

Equity dividends paid

2

-

-

-

(46)

(46)















Balance at 30 April 2021


921

140

(101)

2,419

3,379








 

 

** The fair value gain on financial assets through Other Comprehensive Income represented a realised gain.

 NOTES

 

 

1. General information

 

Whilst the financial information included in this preliminary announcement has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, this announcement does not itself contain sufficient information to comply with IFRSs.

 

The financial information is presented in pounds sterling rounded to the nearest thousand, and prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and under the historical cost convention, except for the revaluation of certain financial assets. The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 30 April 2021 or 30 April 2020.

 

The financial information for the year ended 30 April 2020 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 financial information for the year ended 30 April 2021 is derived from the audited statutory accounts for the year ended 30 April 2021 on which the auditors have given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis. The statutory accounts will be delivered to the Registrar of Companies following the Company's annual general meeting.

.

 

 

2. Alternative performance measures - (loss)/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

2021

2020


£000

£000




(Loss)/profit before taxation

(834)

76

Add back: Share based payment expense

Include: Fair value (loss)/gain on financial assets through OCI

-

(101)

68

99




Adjusted (loss)/profit before share-based payment expense and taxation

(935)

243




Taxation

146

(40)




Adjusted (loss)/profit after tax for the year

(789)

203

 

 

The fair value loss on financial assets represents the unrealised loss in the year on the revaluation of the Group's interest in the SHIPS 16 syndicate.

 

For the prior year, 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 accounted for the surrender of options in the prior year as a cancellation, in accordance with IFRS 2, resulting in an acceleration of vesting and a share-based payment charge of £68,000 (2021: £nil).  The charge reflected the amount that otherwise would have been recognised for services received over the remainder of the vesting period.

 

 

3.  Dividends

 

Year ended 30 April

2021

2020


£000

£000

Equity dividends on ordinary shares:



Declared and paid during year



Ordinary final dividend for the year ended 30 April 2020: 0.50p per share (2019:  0.75p)

46

 

69

 

Interim dividend for the year ended 30 April 2021: nil per share (2020: 1.00p)

-

92





46

161




Proposed ordinary final dividend for the year ended

30 April 2021: nil per share

 

-

 

 

 

 

4. Earnings per share

 

Number of shares

2021

No

2020

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

 

(Loss)/profit after tax for the year

 

(688)

 

36

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



Add back: Share based payment expense

-

68

Include: Fair value (loss)/gain on financial assets through OCI

(101)

99




Adjusted (loss)/profit after tax for the year

(789)

203

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



 

 

Earnings per share

 



Basic

Diluted

(7.47p)

(7.47p)

0.39p

0.39p

 

 

Adjusted earnings per share

 

Basic

Diluted

 

 

 

 

 

 

(8.57p)

(8.57p)

 

 

 

 

2.20p

2.20p

All share options were surrendered in April 2020. The share options were non-dilutive for the year ending 30 April 2020 and as a result were not included within the weighted average number of shares for the diluted earnings per share calculation.

 

Forward Looking Statements

 

Certain statements in this announcement are forward-looking statements relating to the Company's operations, performance and financial position based on current expectations of, and assumptions and forecasts made by, management.  They are subject to a number of risks, uncertainties and other factors which could cause actual results, performance or achievements of the Company to differ materially from any outcomes or results expressed or implied by such forward-looking statements.  Undue reliance should not be placed on such forward looking statements.  They are made only as of the date of this announcement and no representation, assurance, guarantee or warranty is given in relation to them including as to their accuracy, completeness, or the basis on which they are made.

 

 

END

 

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