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Share Name Share Symbol Market Type Share ISIN Share Description
Fletcher King Plc LSE:FLK London Ordinary Share GB0003425310 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 47.50 45.00 50.00 49.40 47.50 47.50 2,500 08:00:04
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment & Services 2.6 0.1 0.4 121.8 4

Fletcher King PLC Half-year Report

18/12/2020 7:00am

UK Regulatory (RNS & others)


Fletcher King (LSE:FLK)
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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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December 18, 2020 02:00 ET (07:00 GMT)

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